It is also indicated in the results, that part of the effect of gender wage inequality on growth is transferred through its positive effect on investment as a share of GDP. Easterly (2001) examines in his paper, Pakistan as case study of two propositions. One is that under high inequality, the political economy models of growth and public service provision put emphasis on the inducements of the elite or privileged to under-invest in the human capital of the majority. While the other political economy models emphasize that ethnic divisions will lead to low public goods provision. Over the period of 1950-99, Pakistan has had a knowledgeable and high-achieving elite and
Although it is still crucial to point out, that markets are still developing, and as the product demand keeps rising, the production has been moved to developing countries, where exploitation is the main reason behind terrible living and working conditions, and often child labour. Furthermore, even if living conditions have improved in developed countries, this uneven distribution of power is still present and resulting in social inequality, as for example regarding education, even though more students from lower and middle classes are more likely to get a higher education today than just half a century ago. By looking at the subdivision of students in universities in the U.S., for example economic resources are often the reason behind why students from working-class families are lesser than students from higher-class families. Financial resources play a crucial role: in the U.S. students will usually have to take big loans in order to attend their studies, but these loans are usually difficult to pay back, once that students are done with their education. It often takes several years to pay them back.
Economic research has traditionally focused on some measure of income or wages. Studies assessing the association between parent and offspring income focus on pairs of fathers and sons. Ideally, income should be measured by a household’s disposable income, as this most directly influences the standard of living of individuals. One factor that can be accounted for such low social mobility in United States as compared to other developed countries in the West can be as a result of high income inequality. The more there is inequality there will be less chance for the individuals for upward mobility because social mobility is inversely related to income
According to Bowles and Gintis (1976) the main factor in determining someone’s success and income is not to their ability but a result of their background and class. The myth of meritocracy does nothing to help the working class, while justifying the privileges of the higher classes, giving the perception that these classes excel through fairness and open methods. The myth of meritocracy is a way of making the working class accepts their role in society. (Kennedy and Power, 2010) The idea of that meritocracy exists is given to students through the hidden curriculum. This results in the working class accepting inequality, thus making it less likely to try to overthrow capitalism.
It is widely believed, that mechanisms, implemented in markets, societies and policies are able to prevent undermining the potential for economic growth and are able to align the level of inequality in Asian countries. To begin with, income inequality is usually measured at national level and it is apparently defined as an uneven distribution of money among the population. In this essay such three mechanisms as improved education, tax policy and redistribution are going to be addressed and examined in more detail. Due to this fact, the main aim is to provide mechanisms significance and to prove their effectiveness and inevitable role in economic and social development. In the world where most educated receive the largest share of benefits from technological progress and rapidly changing social environment , it is not surprising that government expenditure on education has proved to be a highly effective tool in reducing inequality.
The investigation of within-group inequalities for other socio-economic variables such as education and health has been lacking to a great extent. In a recent paper, it has been discussed that the world education inequality emanates mainly from within country component (Sahn and Younger, 2007). The decrease in cross country educational attainment is balanced by the rise in the countries, hence world education inequality remains at high levels According to Channar, Abbassi,
The notion that education generates sufficient external benefits, either through higher levels of economic growth spillovers is examined and found lacking. Even under conditions of market failure, government failure is omnipresent and sufficiently. Through education provides positive externality and that university education needs to be subsided the government might not have enough money to pay for education which might also reduce the funds paid by the
INTRODUCTION A fundamental question in growth theory asks whether increasing government expenditure promotes economic growth. Yet the empirical evidence is inconclusive. On the one hand, government expenditure on education and health care would raise labor productivity. Further, government expenditure on such infrastructure as roads and communications would also boost the rate of private domestic investment, which in turn fosters economic growth. Barro (1991, p. 430), for instance, argues that “expenditures on education and defense are more like public investment than public consumption; in particular, these expenditures are likely to affect private sector productivity or property rights, which matters for private investment.” On the other hand, higher government spending may hinder overall economic performance if the spending comes at a cost of increased taxes and/or borrowing to finance the government expenditures.
We also regressed the calculated wealth index with the educational attainment of the children. Results were in line with common economic theories such as the wealth effect and Keynes’ Theory of Consumption that wealth is positively correlated with total expenditure and educational attainment of individuals. These prove the reliability of our measure. Wealth index is also preferred over using total expenditure as a measure for socioeconomic status because consumption tends to be more volatile, characterized by seasonality and trend (Kumaranayake et. al., 2006).
This theory now can be defined as a vital indicator in economic productivity, and can be identified regarding several types of human behaviors. Acemoglu (2009) specifies human capital “ corresponds to any stock of knowledge or characteristics the worker has that contributes to his or her productivity”. The advantage of the theory can be considered as ability to not only respect schooling, but also of a several other aspects as investments such as quality of education, training, attitudes towards work. However, this theory also has the big disadvantage which is only being focused on “skills” but not considering other dimensions such as years of schooling. (Acemoglu, 2009).