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Study on the Relationship between Education and Income Distribution Gap in China and Related Regions

Author: WangYanZhen
Tutor: LiXiuMin
School: Northeast Normal University
Course: Regional Economics
Keywords: Educational expansion Educational inequality Income distributiongap Simultaneous-equations model
CLC: G521
Type: Master's thesis
Year: 2013
Downloads: 5
Quote: 0
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Abstract


Education relates to national economy and people’s livelihood. Incomedistribution relates to long-term stability. Both factors are significant to country’shealthy development.This paper collects the data from1996to2011, establishessimultaneous-equations model, then use three-stage least square(TSLS) to estimatethe relationship among education expansion, educational inequality and incomedistribution. Taking China’s considerable inter-regional differences into account, thisstudy will not only stay at the national level, but also be extended to the regionallevel.Based on the empirical results, this paper draws main conclusions as follows:(1)The relationship between income distribution gap and education unequal varies byregion. Eastern and central exhibit the virtuous circle between narrowing the incomedistribution gap and reducing the education inequality. However the west exhibits theopposite tendency.(2)The impact of education expansion on income distribution gapis inverted U-type. At present, China locates on the right side of the inverted U-typecurve. Namely, the income distribution gap is gradually reduced with the expansion ofeducation. On the other hand, narrowing the income distribution gap can alsoconducive to the expansion of education.(3)Education expansion helps to reduce theextent of educational inequality. In return, the reduction of educational inequalitypromotes the expansion of education.The first part is an introduction, which introduces the background and significance,sorts out, summarizes and judges the existing domestic and international research,identifies the deficiencies of the existing research, and defines research direction ofthis paper, then introduces the main contents and methods used in this study.The second part is the theoretical foundation and model. The main theories abouteducation and income distribution are human capital theory and labor market theory.This paper describes the two theories and on the basis of them, uses average years ofschooling, educational inequality and income distribution gap as endogenousvariables to build simultaneous-equations model.The third part is empirical analysis, which selects specific indicators for eachvariable and calculates them according to the model proposed by the second part. Thispart combines with the actual and in-depth analyzes several important indicators,substitutes these data into the model and uses three-stage least squares method toestimate results, then elaborates them.The fourth part is the conclusion and policy recommendation, which summarizesthe main conclusions according to the calculated results and empirical results, andproposes policy recommendations to promote education expansion and reduce thedegree of educational inequality and narrow the income distribution gap.

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CLC: > Culture, science,education, sports > Education > China's education > Educational reform and development
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