Skip to main content
SpringerLink
Log in

Rates of return to education and income distribution

  • Published:
De Economist Aims and scope Submit manuscript

Summary

This paper examines the relationship between rate of return to education and income distribution with the help of cross-nation data on 30 developing and developed countries. The results indicate that the higher income groups in the society benefit the higher the rate of return to any level of education, and the bottom 40 percent and the middle 40 percent income groups lose; and the disadvantage for the poor income groups is the least at the primary level of education. As higher rates of return to education suggest higher levels of income inequalities, rapid expansion of the education system may reduce income inequalities through decline in rates of return to education. Secondly, it is also argued here that since high income groups benefit from all levels of education, education investments targeted specifically towards the poor may be preferred to overall investment in education.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Bhagwati, Jagdish, ‘Education, Class Structure and Income Equality,’World Development, 1 (1973), pp. 21–36.

    Google Scholar 

  • Carnoy, Martin, Henry Levin, R. Nugent, S. Summa, C. Torres and J. Unsicker, ‘The Political Economy of Financing Education in Developing Countries,’ in:Financing Educational Development, International Development Research Centre, Ottawa, 1972, pp. 39–86.

    Google Scholar 

  • Chenery, Hollis B., and M. Syrquin,Patterns of Development 1950-1970, New York, Oxford for the World Bank, 1975.

    Google Scholar 

  • Chenery, H.B., M.S. Ahluwalia, C.L.G. Bell, J.H. Duloy and R. Jolly,Redistribution with Growth, London, Oxford for the World Bank, 1974.

    Google Scholar 

  • Fields, Gary S., ‘Assessing Progress toward Greater Equality of Income Distribution,’ in: William P. McGreevey (ed.),Third World Poverty: New Strategies for Measuring Development Progress, Lexington, Mass., 1980, pp. 47–81.

  • Guisinger, Stephen E., James W. Henderson and Gerald W. Scully, ‘Earnings, Rates of Return to Education and the Earnings Distribution in Pakistan,’Economics of Education Review, 3 (1984), pp. 257–267.

    Google Scholar 

  • Kuznets, Simon, ‘Economic Growth and Income Inequality,’American Economic Review, 45 (1955), pp. 1–28.

    Google Scholar 

  • Kuznets, S., ‘Quantitative Aspects of Economic Growth of Nations III: Distribution of Income by Size,’Economic Development and Cultural Change, 11, Part II (1963), pp. 1–80.

    Google Scholar 

  • Lecaillon, Jacques, Felix Paukert, Christian Morrissonand Dimitry Germidis,Income Distribution and Economic Development: An Analytical Survey, International Labour Office, Geneva, 1984.

    Google Scholar 

  • Mathur, Gautam, ‘Financial Allocation to the Educational Sector: Some Considerations,’Journal of University Education, 5 (1966), pp. 73–83.

    Google Scholar 

  • Paukert, Felix, ‘Income Distribution at Different Levels of Development: A Survey of Evidence,’International Labour Review, 108 (1973), pp. 97–125.

    Google Scholar 

  • Psacharopoulos, George, ‘Returns to Education: A Further International Update and Implications,’Journal of Human Resources, 20 (1985), pp. 584–604. [World Bank Reprint Series: No. 362, Washington D.C.].

    Google Scholar 

  • Psacharopoulos, G., and Maureen Woodhall,Education for Development, New York, Oxford for the World Bank, 1985.

    Google Scholar 

  • Schultz, Theodore W., ‘Rate of Return in Allocating Investment Resources to Education,’Journal of Human Resources, 2 (1967), pp. 293–309.

    Google Scholar 

  • Schultz, T.W., ‘The Noble Lecture: The Economics of Being Poor,’Journal of Political Economy, 88 (1980), pp. 639–651.

    Google Scholar 

  • Tilak, Jandhyala B.G.,Economics of Inequality in Education, Sage Publications for the Institute of Economic Growth, New Delhi, 1987.

    Google Scholar 

  • Tilak, J.B.G.,Education, and its Relation to Economic Growth, Poverty and Income Distribution: Past Evidence and Further Analysis, World Bank Discussion Paper No. 46, Washington D.C., 1989.

  • Tinbergen, Jan, ‘The Impact of Education on Income Distribution,’Review of Income and Wealth, 18 (1972), pp. 255–265.

    Google Scholar 

  • World Bank,Poverty and Human Development, Washington D.C., 1980.

Download references

Author information

Authors and Affiliations

  1. The World Bank, Washington, D.C., USA

    Jandhyala B. G. Tilak

Authors
  1. Jandhyala B. G. Tilak
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

The author is Consultant, the World Bank, Washington D.C., 20433 (USA), while on leave from the National Institute of Educational Planning and Administration, New Delhi. The incisive comments of George Psacharopoulos, Rati Ram, and the Editor(s) of this Journal on earlier versions of this study are gratefully acknowledged. However, the views expressed here and the errors that remain are the responsibility of the author alone and should not necessarily be attributed to anyone else, including the World Bank.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Tilak, J.B.G. Rates of return to education and income distribution. De Economist 137, 454–465 (1989). https://doi.org/10.1007/BF01705975

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF01705975

Keywords

Search

Navigation