TITLE:
The Effects of Income Inequality on Education Policy and Economic Growth
AUTHORS:
Katsuyuki Naito, Keigo Nishida
KEYWORDS:
Income Inequality; Majority Voting; Human Capital Accumulation; Economic Growth
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.1,
February
23,
2012
ABSTRACT: This paper presents a simple model to investigate the relationship among initial income inequality, education and eco- nomic growth. Public expenditure on education is determined through majority voting. Although preferences of individuals are not single-peaked, the individual with the median income becomes the decisive voter. Our model predicts that high initial inequality has a negative impact on education expenditure and therefore retards economic growth.