Open Journal Systems

Education Attainment Forecasting and Economic Inequality in the United States

Sudeshna Ghosh

Abstract

This paper explores a major issue in the context of economics of inequality, namely how far the stark inequalities are retarding educational attainment in the United States in the recent period. An application of the time series ARIMA model is made to forecast both high school and college education in the United States for the period 2018- 2022. The study obtains fluctuating trends (forecast) in certain categories of school educational attainment. A Multi Variate Error Correction Model is utilized to assess how far socio economic factors are responsible in the process of educational attainment. The study obtains a bidirectional long run causal association across educational completion, income growth, inflation, and income inequality. Income inequality and the distribution of income   in the United States has a positive bearing on the education sector. Further distributive polices and the behaviour of government spending have a significant effect on the quality of learning. Last, attainment of education and its ramification has an important bearing on the level of income in the United States in the long run.


Keywords

United States; inequality; education; ARIMA model; time series; vector error correction

Full Text:

PDF

References

Bernstein, Jared. The impact of inequality on growth. 2013; Center for American Progress, Washington.

Stiglitz, J. E. The price of inequality: How today's divided society endangers our future. 2012; WW Norton Company.

Alesina, A., Roderick, D. Distributed politics and economic growth. Quarterly Journal of Economics .1994; 109 (2): pp. 465-490.

Alvaredo, F., Atkinson, A. B., Piketty, T., Saez, E. The top 1 percent in international and historical perspective. Journal of Economic perspectives. 2013; 27(3): 3-20.

Hoeller, P., I. Joumard, M. Pisu, et al. Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Inequality Across the OECD. 2012; OECD Economics Department Working Paper, No. 924.

Chen, S., Ravallion, M. The developing world is poorer than we thought, but no less successful in the fight against poverty. The Quarterly Journal of Economics. 2010; 125(4): 1577-1625.

Oded, G. Inequality, human capital formation, and the process of development. In Eric A. Hanushek, Stephen Machin and Ludger Woessmann (eds). Handbook of the Economics of Education. Vol. 4, 441-49. North Holland: Elsevier; 2011.

CPS Historical Time Series Tables. United States Census. 2017. Retrieved from URL: https://www.census.gov/data/tables/time-series/demo/educational-attainment/cps-historical-time-series.html.

World Bank’s World Development Indicators (WDI) 2017. Retrieved from URL:. http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators.

IMF, Government Finance Statistics Yearbook. Retrieved from URL: https://data.imf.org/?sk=a0867067-d23c-4ebc-ad23-d3b015045405.

Box, G. E. P, GM Jenkins. Time Series Analysis, Forecasting, and Control. Francisco Holden-Day; 1970.

Sims, C. A. Macroeconomics and reality. Econometrica: Journal of the Econometric Society. 1980; 1-48.

Kuznets, S. Economic growth and income inequality. The American Economic Review. 1955; 45(1): 1-28.

Ahluwalia, M.S. Income Inequality: Some dimensions of the problem, In H. Chenery et al., (eds.). Redistribution with Growth .Oxford: Oxford University Press, 1974; 3-37.

Robinson, S. (1976). A note on the U hypothesis relating income inequality and economic development. The American Economic Review. 1976; 66(3): 437-440.

Stewart, F. Inequality, technology and payments systems. World Development. 1978; 6(3): 275-293.

Winegarden, C. R. Schooling and income distribution: Evidence from international data. Economica. 1979; 83-87.

Nielsen, F., Alderson, A. (1995). Income inequality, development, and dualism: results from an unbalanced cross-national panel’. American Sociological Review.1995; 60 (5): 674-701.

Checchi, D. Does Educational Achievement Help to Explain Income Inequality? Working Paper No. 208 (Helsinki: United Nations University, World Institute for Development Economics Research; 2000.

Wells, R. Education’s effect on income inequality: an economic globalisation perspective. Globalisation, Societies and Education. 2006; 4(3): 371-391.

Galor, O., Zeira, J. Income distribution and macroeconomics. The review of economic studies. 1993; 60(1): 35-52.

Aghion, P., Bolton, P. A theory of trickle-down growth and development. The Review of Economic Studies. 1997; 64(2): 151-172.

Galor, O., Tsiddon, D. Technological progress, mobility, and economic growth. The American Economic Review; 1997. 363-382.

Siebert, H. Commentary: Economic consequences of income inequality. In Symposium of the Federal Reserve Bank of Kansas City on Income Inequality: Issues and Policy Options p. 265-281, 1998.

Jason Furman Joseph E. Stiglitz. Economic Consequences of income inequality. Proceedings - Economic Policy Symposium - Jackson Hole. Federal Reserve Bank of Kansas City. p.221-263; 1998.

Park, K. H. Income inequality and economic progress: An empirical test of the Institutionalist approach. American Journal of Economics and Sociology. 1996 a; 55(1): 87-96.

Park, K. H. Distribution and growth: cross-country evidence. Applied Economics. 1998; 30(7): 943-949.

Forbes, K. J. A reassessment of the relationship between inequality and growth. American economic review. 2000; 90(4): 869-887.

Partridge, M. D. Is inequality harmful for growth? Comment. The American Economic Review. 1997; 87(5): 1019-1032.

Partridge, M. D. Does income distribution affect US state economic growth? Journal of Regional Science. 2005; 45(2): 363-394.

Becker, G. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. New York: Columbia Univ. Press; 1964.

Park, K. H. Educational expansion and educational inequality on income distribution. Economics of education review. 1996b; 15(1): 51-58.

Ahluwalia, M. S. Inequality, poverty, and development. Journal of development economics. 1976; 3(4): 307-342.

Barro, R. J. Inequality and Growth in a Panel of Countries. Journal of economic growth. 2000; 5(1): 5-32.

Alderson, A. S., Nielsen, F. Globalization and the great U-turn: Income inequality trends in 16 OECD countries. American Journal of Sociology. 2002; 107(5): 1244-1299.

Winegarden, C. R. Schooling and income distribution: Evidence from international data. Economica. 1979; 83-87.

Ram, R. Population increase, economic growth, educational inequality, and income distribution: Some recent evidence. Journal of Development Economics. 1984; 14(3): 419-428.

Gregorio, J. D., Lee, J. W. Education and income inequality: new evidence from cross‐country data. Review of income and wealth. 2002; 48(3): 395-416.

Tinbergen, J. (1972). The impact of education on income distribution. Review of Income and wealth. 1972; 18(3): 255-265.

Chani, M. I., Jan, et al. Human capital inequality and income inequality: testing for causality. Quality Quantity. 2014; 48(1): 149-156.

Jenkins, H. Education and production in the United Kingdom. Paper No.101 Oxford: Nuffield College; 1995.

Moretti, E. Estimating the social return to education: evidence from repeated cross-sectional and longitudinal data. Center for Labor Economics Working Paper, 22; 1999.

Freeman, R., Schettkat, R. Skill compression, wage differentials, and employment: Germany vs the US. Oxford Economic Papers.2001; 53 (3), 582-603.

Lopez, R., Thomas, V., Wang, Y. Addressing the education puzzle: the distribution of education and economic reform. The World Bank.; 1999.

Bhargava, A., Jamison, D. T., Lau, et al. Modeling the effects of health on economic growth. Journal of health economics. 2001; 20(3): 423-440.

Appiah, E. N., McMahon, W. W. The social outcomes of education and feedbacks on growth in Africa. Journal of Development Studies. 2002; 38(4): 27-68.

Yang, D. T. What has caused regional inequality in China? China Economic Review. 2002; 13(4): 331-334.

Jamal, H., A. J. Khan. The changing profile of regional inequality. The Pakistan Development Review. 2003; 113-123.

Mogues, T. and Carter, M. R. Social Capital and the reproduction of economic inequality in polarized societies. Journal of Economic Inequality. 2005; 3: 193–219.

Földvári P, Leeuwen B.V. Educational inequality in Europe, 1870-2000. Presented in: Workshop on human capital in economic history: measurement, determinants and implications, Tuebingen, Germany; 27–29 August, 2010.

Checchi, Daniele, Education, Inequality and Income Inequality Research Paper No. 52. 2001. Retrieved from SSRN: https://ssrn.com/abstract=1094825.

Checchi, Daniele, van de Werfhorst, Herman. Educational Policies and Income Inequality. IZA Discussion Paper No. 8222; 2014. Retrieved from SSRN: https://ssrn.com/abstract=2450413.

Galor, O. The demographic transition: causes and consequences. Cliometrica. 2012; 6(1): 1-28.

Blau, F. D., Kahn, L. M. Do cognitive test scores explain higher US wage inequality? Review of Economics and statistics. 2005; 87(1): 184-193.


DOI: http://dx.doi.org/10.18063/csa.v1i2.787
(67 Abstract Views, 28 PDF Downloads)

Refbacks

  • There are currently no refbacks.


Copyright (c) 2018 Sudeshna Ghosh

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.