Saturday, 12 July 2008

Inequality in Transition

I attended the 15th World Economic Congress of the International Economic Association which took place in Istanbul during the last week of June. A presentation I listened to dealt with rising income inequalities in transition economies. One of the conclusions was that since wages increase with higher education, more should be invested into decreasing these inequalities via improved education opportunities for the general population. However, although wages do rise with more education, there is abundant economic evidence that wages are far from being the main contributor to income inequality. It is in fact asset ownership and non-wage income that mainly contribute to these inequalities. This makes me wonder whether we can really bridge the gap of this transitional redistribution and private appropriation of capital through increased investment in education? Especially since it is well known that, for most cases, it wasn't the level of education that determined the losers and winners of transition. I wonder to what extent this is a temporary phenomenon...

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