What effect does a country’s education system have on its economic
performance? Most analysis of this crucial issue has focused on the impact on
growth of the average years of schooling children go through. But in new
research published in the latest issue of the Economic Journal, Amparo Castelló
and Rafael Doménech reveal that there is another vitally important dimension:
the distribution of education - who is educated and to what extent.
Their results, which derive from data on 108 different countries for the period
1960-99, show that educational inequality has a significant negative effect on
economic growth rates. They conclude that:
‘Education inequality is no t only a social problem but also an economic
one since countries with a more egalitarian distribution of education grow
on average more than those with greater inequality.’
The clear implication is that policies to promote growth should not only take
account of the average years of schooling but also the distribution of education.
The research also reveals that there are strong negative relationships between
educational inequality and the growth of country’s education system, and
between educational inequality and life expectancy.
Nevertheless, there has been a notable process of convergence in education
inequality indicators between 1960-99 although differences in the distribution of
education are still considerable. This convergence can be partially exp lained by
the efforts made in many countries to eradicate illiteracy.
The mechanism through which educational inequality leads to lower growth is
through its effect on investment rates. The researchers find that those countries
that in 1960 had greater inequality in the distribution of education have
experienced lower investment rates - in both physical and human capital - than
countries with less inequality. These lower investment rates have in turn meant
lower growth rates.
The indicators of education inequality the researchers use are obtained in a
similar way to standard income inequality measures, using information about the
proportions of population with different levels of education. The data show clearly
that education distribution matters because in spite of having the same average
schooling years in the population over 15 years of age and a similar distribution
of income, countries differ significantly in the distribution of education.
For example, according to recent World Bank figures, in the 1980s, India and
Indonesia, both highly populated countries, had similar levels of income
inequality.
They also had similar levels of average years of schooling: approximately 3.6
years of formal education. But the distribution of education in the two countries
was quite different: the proportion of the population with no schooling and, at the
other extreme, with a university education was much higher in India than in
Indonesia.
ENDS
Rafael Doménech is at the University of Valencia, Spain.
Amparo Castello is at Universidad Carlos III de Madrid.
For Further Information: contact RES Media Consultant Romesh Vaitilingam on
0117- 983-9770 or 07768-661095 (email: romesh@compuserve.com); or
Amparo Castelló on 0034 916249317 (email: amparo.castello@uc3m.es).