Education and income distribution

Because education helps to unleash the productive potential of the poor, it is good for growth and good for poverty reduction. Linked to such direct benefits are wider equity effects. Greater equity in the distribution of educational opportunities will enable the poor both to capture a larger share of the benefits of economic growth, and to contribute to an overall increase in the rate of growth. By contrast, large-scale exclusion from educational opportunities results in slower economic growth; the benefits of growth are in turn enjoyed mainly by those with access to skills and knowledge.
The relationship between education and income equality derives from the economic returns associated with education. In cases where the demand for educated labour outstrips supply, its price - the wage - will increase. If demand for unskilled labour is growing at a slower rate than the demand for skilled labour, or contracting, then wage inequalities will increase, widening the gap between rich and ...