The relationship between income inequality and tertiary attainment for developing countries: is it a u-shaped relationship

Abstract

This study explores the effects of tertiary attainment and per capita income on income inequality for 30 developing countries over the period 1990-2008 by three different estimation approaches namely classical estimation of a fixed effects panel data model, quantile panel type regression, and robust panel type regression models. The findings reveal that there is no evidence of the Kuznets hypothesis of inverted U curve dependence of income inequality on income. However, the results of robust panel type regression and quantile regression for the 20th percentile indicate this relationship as U-shaped. According to robust panel type regression, the effect of tertiary attainment on income inequality is significant and U-shaped, as well. Keywords : Income inequality, Kuznets inverted U hypothesis, Quantile regression, Robust regression, tertiary education. JEL Classification : C14, C23, I32