Education, Globalization, and Income Inequality in Asia

Abstract

This study considers how education and globalization affect income inequality in Asia, with unbalanced panel data. The evidence supports the validity of Kuznets’ inverted-U hypothesis for the connection between income level and income inequality. However, when more variables are integrated into the model, the consistency of the inverse U-shaped curve becomes weaker. The empirical results suggest that educational variables are highly influential in affecting income distribution. Our analysis indicates that a higher level of education achieved by the population aged 15 and over has improved income distribution in Asia, while educational inequality, measured by the education Gini index, has a negative effect on income distribution. Higher levels of globalization are correlated with higher levels of income inequality, while freedom, either political or economic, has marginal effects on the level of inequity in income distribution.