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A Model of Public Education and Income Inequality with a Subsistence Constraint

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  • Kevin Sylwester

Abstract

This paper constructs a model in which incomes do not necessarily converge under a public education system. School attendance creates an opportunity cost of foregone income that poorer agents might need. These poorer agents, unlike high‐income agents, allocate less time to schooling and so are less able to increase their human capital. However, some agents in a poverty trap might actually have higher income, at least temporarily, than do agents who do not fall into this trap. The model also shows why better public education systems can lead to more income inequality and why a gradual allocation of resources to public education may prove more beneficial than a sudden, large shift of resources.

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  • Kevin Sylwester, 2002. "A Model of Public Education and Income Inequality with a Subsistence Constraint," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 144-158, July.
    • Handle: RePEc:wly:soecon:v:69:y:2002:i:1:p:144-158
    DOI: 10.1002/j.2325-8012.2002.tb00482.x
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    References listed on IDEAS

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    1. Sylwester, Kevin, 2002. "Can education expenditures reduce income inequality?," Economics of Education Review, Elsevier, vol. 21(1), pages 43-52, February.
    2. Roberto Perotti, 1993. "Political Equilibrium, Income Distribution, and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(4), pages 755-776.
    3. Saint-Paul, Gilles & Verdier, Thierry, 1993. "Education, democracy and growth," Journal of Development Economics, Elsevier, vol. 42(2), pages 399-407, December.
    4. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 35-52.
    5. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    6. Jimenez, Emmanuel, 1986. "The Public Subsidization of Education and Health in Developing Countries: A Review of Equity and Efficiency," The World Bank Research Observer, World Bank, vol. 1(1), pages 111-129, January.
    7. Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(2), pages 249-262.
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    Cited by:

    1. Alali, Walid Y., 2011. "Inequality in Education and Income Across Countries," EconStor Preprints 269880, ZBW - Leibniz Information Centre for Economics.
    2. Alali, Walid Y., 2011. "Inequality in Education and Income Across Countries," MPRA Paper 115615, University Library of Munich, Germany.
    3. Rajput, Sheraz Mustafa & Javaid, Muhammad Nadeem & Junaid, Ahmad, 2023. "Financial Development and Income Inequality: A U-shaped Relationship," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 30(2), July.

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