The Effect of Education on Poverty and Income Inequality

We study the effect of education and its expenditures, especially in higher education, on poverty and income inequality. Using the Keynesian approach it is shown that education, from the theoretical point of view, lowers poverty and income inequality level. In an empirical work we, used the data including 111 observations from 91 countries, with different human development levels, and concluded that the net enrolment rate in secondary schools has inversely and significantly affected the poverty and income inequality. Also education expenditures as percent of GNP has significantly decreased the level of poverty and income inequality. Another result of this research is that the negative effect of higher education expenditures on poverty and income inequality is greater than the effect of education expenditures in primary and secondary schools.
JEL Classification: D63-H52- I21