HUMAN CAPITAL INEQUALITY AND INCOME INEQUALITY

Abstract

The study tries to trace direction of relationship existing between distribution of human capital and income using a dataset of around 65 countries over a period of 50 years from 1970-2020. Instead of using years of schooling as a proxy, we have used the data on returns to schooling and years of educational attainment to calculate human capital. To portray the relationship, we have used two methods one is of graphical representation, and another is of regression analysis. We used the scatterplots to trace the relationship across all countries and after that divided the countries in five different groups to observe the variations across different group of countries. We try to observe factors that influence the relationship between the two measures of inequality. To consider, the effects of other factors we used the regression analysis. Our results are based on fixed effect regression analysis technique, cross sectional dependence test and endogeneity tests.