Educational and income inequality in Europe, ca. 1870-2000

when 2014
who Péter Földvári

Bas van Leeuwen

what journal Cliometrica
what paper Educational and income inequality in Europe, ca. 1870-2000
language English

involved project member(s)

Bas van Leeuwen Peter Foldvari
   

abstract

In this paper, we revisit the relationship between educational and income inequalities in a historical perspective, using a newly developed annual dataset of average years of education in Europe. Theoretically one would expect a reduction in educational inequality should, given the positive correlation between education level and income, initially increase and then, at a later stage, reduce income inequality. Testing for such a Kuznets-type relationship between educational and income inequalities yields an unexpected result: we find the expected inverse U-curve before the 1950s, but the relationship changes into a normal U-curve afterward. We explain this observation by a change in the trend of skill premium during the second half of the twentieth century due to an increased relative demand for skills, which contradicts the usual assumption of decreasing returns to education. Due to lack of appropriate wage data, we cannot directly capture this effect. Yet, once we use an instrumental variable estimation method to filter out the effect of the omitted skill premium, the expected inverse U-curve also appears for the latter decades of the twentieth century.

keywords

Average years of education, Economic development, Inequality, Kuznets-curve

link to paper page of the journal website

https://link.springer.com/article/10.1007/s11698-013-0105-3

citation format

MLA
Földvári, Péter, and Bas van Leeuwen. “Educational and income inequality in Europe, ca. 1870–2000.” Cliometrica 8.3 (2014): 271-300.
APA
Földvári, P., & van Leeuwen, B. (2014). Educational and income inequality in Europe, ca. 1870–2000. Cliometrica, 8(3), 271-300.
Chicago Földvári, Péter, and Bas van Leeuwen. “Educational and income inequality in Europe, ca. 1870–2000.” Cliometrica 8, no. 3 (2014): 271-300.
Harvard Földvári, P. and van Leeuwen, B., 2014. Educational and income inequality in Europe, ca. 1870–2000. Cliometrica, 8(3), pp.271-300.
Vancouver Földvári P, van Leeuwen B. Educational and income inequality in Europe, ca. 1870–2000. Cliometrica. 2014 Sep 1;8(3):271-300.