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Abstract

In this paper, we address the issue of how education affected income inequality in twentieth-century Africa. Three channels are identified through which education may affect income inequality. First, an increase in the average educational level is correlated with an increase in average income, which, ceteris paribus, reduces inequality. Second, a reduction in educational inequality may, given a positive correlation between education level and income, reduce income inequality. Thirdly, an increase in the supply of education may decrease the price of skilled labour thus lowering income inequality. We find that in the long-run education does not affect income growth, indicating that in twentieth-century Africa it was inspiration i.e., Total Factor Productivity TFP rather than perspiration i.e., education and physical capital that drove economic development. Testing for the effects of the remaining two channels, we found a significant non-linear relationship between educational and income inequality suggesting that, contrary to the level of education, these two channels were important in determining income inequality in Africa. Taking an example from the end of the twentieth century, if educational equality had been eliminated, then income inequality would decline by no less than 81%.



Item Type: MPRA Paper -

Original Title: Education as a driver of income inequality in twentieth-century Africa-

Language: English-

Keywords: Africa; education; history; inequality; economic growth-

Subjects: N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; FluctuationsO - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - AfricaD - Microeconomics > D6 - Welfare EconomicsN - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and PhilanthropyN - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N17 - Africa ; Oceania-





Author: Van Leeuwen, Bas

Source: https://mpra.ub.uni-muenchen.de/43574/







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