Abstract
Better-educated and younger cohorts from developing countries are entering the global labor market. This education wave is altering the skill and geographic composition of the global labor market, and impacting income distribution, at the national and global levels. This paper analyzes how this education wave reshapes global inequality over the long run using a general-equilibrium macro-micro simulation framework that covers harmonized household surveys for almost 90% of the world population. The findings suggest that global income inequality will likely decrease by 2030. The expanding supply of better educated workers from developing countries will be a key factor, especially in supporting the reduction of income disparities between countries. The education wave will also minimize, mainly for developing countries, increases of within-country inequality linked to technological progress and its widening of wage premia.
Highlights
In the two decades, younger and better-educated cohorts are projected to contribute to the expansion of the global workforce, while older, less educated ones leave
Expanding on earlier methodologies (Almeida dos Reis, Paes de Barros, 1991; Bourguignon et al 2005), and combining two global economic models, the LINKAGE global general equilibrium model and the Global Income Distribution Dynamics (GIDD) microsimulation framework, we focus on the effects of educational attainment and demographic trends on distributional change
Our education wave scenario shows a comparable reduction of 3.2 Gini points, with the global Gini index falling during the period 2012 to 2030
Summary
In the two decades, younger and better-educated cohorts are projected to contribute to the expansion of the global workforce, while older, less educated ones leave. This skill-biased expansion will be geographically biased, as it will be composed almost exclusively of workers from developing countries. Strong economic expansion of developing countries, including the sustained growth of China and India, boosted convergence of per-capita incomes at the global level.. Strong economic expansion of developing countries, including the sustained growth of China and India, boosted convergence of per-capita incomes at the global level.2 This convergence drove the reduction of global inequality, even if technological change and aging contributed to increasing inequality at the national level in many countries Strong economic expansion of developing countries, including the sustained growth of China and India, boosted convergence of per-capita incomes at the global level. And this convergence drove the reduction of global inequality, even if technological change and aging contributed to increasing inequality at the national level in many countries
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