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Schooling and income inequality in the long-run

Author

Listed:
  • Tarkan Cavusoglu

    (Hacettepe University)

  • Oguzhan Dincer

    (Illinois State University)

Abstract

We estimate the long-run cointegrating relationship between schooling and income inequality using annual data from 48 contiguous U.S. states between 1946 and 2000. Our study contributes to the literature in several ways in terms of data and empirical methodology. First, we take into account integration and cointegration properties of the data and estimate the cointegrating relationship between schooling and income inequality using Fully Modified OLS (FMOLS) following Pedroni (2000, 2001). Second we investigate the direction of the causality. Using several different measures of income inequality, we find that an increase in the average level of schooling decreases income inequality in the long-run and (Granger) causality runs from schooling to income inequality, not the other way around.

Suggested Citation

  • Tarkan Cavusoglu & Oguzhan Dincer, 2019. "Schooling and income inequality in the long-run," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(3), pages 594-606, July.
    • Handle: RePEc:spr:jecfin:v:43:y:2019:i:3:d:10.1007_s12197-018-9459-5
    DOI: 10.1007/s12197-018-9459-5
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    More about this item

    Keywords

    Schooling; Income inequality; Panel cointegration; U.S. states;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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