Education Expenditures, Inequality and Economic Growth: Empirical Analysis of the Transmission Channels

Many economists have confirmed the negative and direct relationship between economic growth and income inequality. Recent studies have tried to analyse the different transmission channels through which inequality may affect economic performance indirectly. In this paper, we are only referring to the education channels: public and private education expenditures and human capital, in order to evaluate the role of each in the explanation of this negative correlation. We noticed that a high level of inequality requires more public resources this may impede economic growth. Income inequality also discourages private financing in education and human capital accumulation which leads to a sluggish economic growth. These findings imply that private education expenditure is the most important channel which explains this negative relationship reported in the literature.