Educational Attainment and Income Inequality: Evidence from Household Data of Odisha

Abstract

This paper examines the impact of education on income inequality by gender, caste, region and occupation using primary data collected from sample households form two selected districts of Odisha by using the earnings function of Mincerian type (1962). The findings clearly show that there are income differences by gender, caste, occupation and region. Women, self employees, SC/STs and people in rural area earn less than their counterparts male, wage employees, upper caste people and people in urban area respectively. The return to education is higher for women, wage employees, SC/STs and people in rural area. The differences in return to education between gender, across caste and across region decline at higher levels of education in both the occupations. The differences in return to education across gender and region are very less for wage employees than in case of self employees. The paper concludes that education is one of the strong instruments for reducing the inequality in income in Odisha. In this backdrop our findings suggest that more educational opportunities to be provided in rural areas, special efforts to be taken to increase level of education of women and lower caste people. Further, Government should provide employment opportunities in rural areas to enhance work participation rate.