Chapter

Schooling and the Distribution of Earnings: The Development of Empirical Research

Tsuneo Ishikawa

in Income and Wealth

Published in print February 2002 | ISBN: 9780198288626
Published online November 2003 | e-ISBN: 9780191596469 | DOI: http://dx.doi.org/10.1093/019828862X.003.0004
 Schooling and the Distribution of Earnings: The Development of Empirical Research

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This chapter focuses on the relationship between schooling and distribution of income, first providing a survey of the fruits of past empirical research, and then discussing the efficacy and limitation of the theoretical framework given in the previous chapter. Section 4.1 deals with internal rate of return to educational investment, now a classical concept concerning schooling and earnings, and Sect. 4.2 closely studies Mincer's conclusion that education and other human investments are the major cause of differences in labour earnings. Section 4.3 offers a more generalized framework for the cause of differences in labour earnings, in which education is treated as one of a number of factors producing the inequality in earnings; it presents a survey of the trials conducted to measure statistically the contribution of different factors to income (the estimation of earnings function), presents a model, and also studies the role of education as intermediary––as revealing individuals’ innate abilities, and as reflecting family and socio‐economic background that might limit access to good educational opportunities. Educational investment, therefore, is evaluated in Sect. 4.3, not only from the viewpoint of productivity enhancement but also from the viewpoint of the signalling effect of information. Finally, Sect. 4.4 re‐examines the relationship between educational attainment and earnings by addressing the more fundamental question of the way that education enhances productivity.

Keywords: ability; educational attainment; educational investment; educational opportunities; income; income distribution; inequality; internal rate of return; investment; productivity; schooling

Chapter.  16389 words.  Illustrated.

Subjects: Public Economics

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