Page 20 - Education and Inclusive Growth --Jong-Wha Lee Korea University

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statistically insignificant effect on income inequality when controlling for other

variables including educational inequality.
The result in Column (2) shows that educational expansion was a major
driver for improving educational distribution. Hence, the average level of

educational attainment can have an indirect effect on income inequality by
changing educational inequality. The estimated coefficient of educational
attainment, -0.035, suggests that an increase in the average schooling of about

three years, that is about one standard deviation, decreases the education
Gini coefficient by about 0.11, which accounts for about 60% of the standard
deviation of the education Gini coefficient. This reduction of educational

inequality is expected to decrease income Gini by about 1.3% point. Therefore,
increase in educational attainment is the major driver improving the education
Gini coefficient, thereby affecting income distribution.

The results of Equations (7) and (8) reported in Lee and Lee (2018) show
that fast income increase, trade expansion, and rapid technological progress
were the main causes of the rising income inequality in many economies in
recent decades and the improved educational attainment and inequality played

important roles in mitigating these income-unequalizing forces. Considering
the policy variables, higher social benefit expenditures contributed to reducing

income inequality, and higher public spending helped narrowing educational
equality, thereby implicitly improving income inequality.

Education, Skills and Technology

Empirical findings in the previous sections suggest that strong educational

expansion played a major role for sustained and equitable economic growth in
the last three decades. However, critics point out the supply of skilled workers