An empirical exploration of education and inequality – Three essays

Abstract

Education has been reckoned as means through which life chances of the poor and the disadvantaged improve. However, prior research has also attributed education as being one of the key channels by which economic inequality is perpetuated in the society. Hence, to understand the interplay between education and inequality better, we explore the two, by empirical means, in different milieu over three essays. In essay one, first, we examine the relationship between globalization and education outcomes, and second, the effect of globalization on economic inequality through the channel of education, for a sample of high and low income countries over the period 1990-2013. Using cross-country data and employing appropriate panel data techniques, we find a positive association between globalization and education outcomes in a country. Next, when a country’s average educational achievements are low, an increase in openness of the country leads to a decrease in economic inequality. However, as the country becomes more globalized and the education outcomes of the country improve, the restorative effects of globalization on economic inequality are observed to go down. In essay two, using a panel of 32 states/UTs of India and unit level data drawn from five large sample NSSO-CES rounds between 1993-94 and 2011-12, we find that the virtuous equity-efficiency relation between education inequality and educational outcomes is realized. A decrease in education inequality enhances the educational attainment of a state on an average. However, the education expansion – economic inequality nexus doesn’t entirely come through. There is seen to be a positive relationship between education inequality and consumption expenditure inequality as well as between educational outcomes and consumption expenditure inequality. The third essay deals with intergenerational education mobility in India. We make use of IHDS-II (2011-12) and prepare a representative dataset that goes beyond co-resident pairs of son-father by utilizing a unique feature of IHDS data. From the resulting sample of 44,532 son-father pairs and appropriate cohort analysis, we find that although there is still a high degree of intergenerational persistence, the same is decreasing steadily over time. Through quantile regression, we learn that sons are most mobile at the top end of the education distribution. Finally, “Higher Inequality à Lesser Mobility” nexus in education plays out for the Indian scenario and thus corroborates the ‘Great Gatsby Curve’. From the policy point of view, given the open economy that India is since 1991, the government needs to make higher education accessible and resolve credit market rigidities to address increased demand and counter the rise in skill premium.