EENEE publication “Reducing Inequality in Education and Skills: Implications for Economic Growth”
The European Expert Network on Economics of Education (EENEE) prepared the new study for the European Commission on understanding the important dimensions of educational inequality and its impacts on society and individuals, and reviewed policies to alleviate it. Namely, empirical studies show that income inequality, closely connected to educational inequality, limits growth. An explanation is limited access to credit: when individuals cannot borrow freely against future income to invest in their human capital, the initial distribution of resources can have large impact on the economy’s pattern of investment and therefore growth. As a result, low income households that are most affected by credit constraints underinvest in education, which can occur even with a public education system if investments in the home matter to outcomes.