Abstract
Better-educated and younger cohorts from developing countries are entering the global labor market. This education wave is altering the skill and geographic composition of the global labor market, and impacting income distribution, at the national and global levels. This paper analyzes how this education wave reshapes global inequality over the long run using a general-equilibrium macro-micro simulation framework that covers harmonized household surveys for almost 90% of the world population. The findings suggest that global income inequality will likely decrease by 2030. The expanding supply of better educated workers from developing countries will be a key factor, especially in supporting the reduction of income disparities between countries. The education wave will also minimize, mainly for developing countries, increases of within-country inequality linked to technological progress and its widening of wage premia.
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Acknowledgements
We thank Christina Calvo, Francisco Ferreira, Ayhan Kose, Christoph Lakner, Maryla Maliszewska, Hans Timmer, Philip Schellekens, Jos Verbeek, and participants of seminars organized by the World Bank’s Equity and Public Policy Practice Group, Development Prospects Group, Graduate Program in Economics at the Federal University of Parana, Brazil, and the 17th Annual Conference on Global Economic Analysis in Dakar, Senegal, for their useful comments. Kyun Chang, Nathaniel Russel, and Ivan Torre provided valuable research assistance. We also thank the support from the Knowledge for Change Partnership multi-donor trust fund. The views expressed in this paper are the authors’ only.
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Ahmed, A., Bussolo, M., Cruz, M. et al. Global Inequality in a more educated world. J Econ Inequal 18, 585–616 (2020). https://doi.org/10.1007/s10888-020-09440-z
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DOI: https://doi.org/10.1007/s10888-020-09440-z