Last week, Save the Children published an important paper on inequality and development entitled Born Equal – How reducing inequality could give our children a better future (PDF). It follows concerns about high levels of income inequality raised in some unlikely quarters: both the International Monitary Fund in a recent paper (PDF) and the Organization for Economic Cooperation and Development (OECD) in a publication have registered anxiety.
What are the implications for education and development? What can we say about the importance of schooling and learning and the links to income inequality? This blog argues that if reducing income inequality becomes one of the big future development challenges then education, particularly primary education, is a core part of the solution.
Brazil: high inequality being pegged back
Countries, like Brazil, that have recently successfully reduced income inequality are a good place to start. The chart below shows the trends in the Gini coefficients for both income and educational inequality in Brazil (the Gini being a measure where 100 is ‘maximum inequality’ and zero ‘perfect equality’). The picture is one of high income inequality, which has started to steadily decline.
There are a number of potential explanations for this: social protection policies, with well-targeted cash-transfer policies, have played a role; so too has greater power of labor movements. But it is striking that educational inequality has reduced just as differences in income have been pegged back. As the World Bank recently concluded, this is no coincidence. In part, the impact of education on income inequality is because progressive spending on schooling has a direct impact on the income distribution. But it is also because of the Brazilian government’s expansion of basic education which resulted in a more equal distribution of human capital – something now feeding through into reduced labor market inequality.
So far, so good for the argument that educational investment – particularly in basic education – plays an important role in achieving more equal societies. But Brazil is a far more developed country than many low income nations. Some economists argue that when countries develop, it is inevitable that they initially become more unequal. It is only after they are more industrialized that equality increases. The initial inequality surge is the result of urbanization and a growth in a rural-urban divide. Incomes become more equal only with the emergence of democratic pressures. Brazil broadly follows this pattern: it had high initial levels of inequality and until the late ‘80s income inequality was still increasing. It is only now that high inequality is being ameliorated.
South Korea: equitable growth and development
However, this pattern of inequitable growth in the early stages of countries’ development is not inevitable. One country which achieved high growth and low and steady rates of inequality throughout the period of its economic development is South Korea. During the ‘60s, ‘70s and ’80s, it achieved staggering growth rates – averaging 18.4% a year between 1962 and 1979. But, as the chart below shows, it also retained low levels of income inequality compared to Brazil.
There are a number of factors which may help to explain this. One is that South Korea in the ‘60s had a relatively equal distribution of land and a relatively equal distribution of educational opportunity. The OECD, when assessing why South Korea achieved equitable growth, concluded that “education policy plays a key role in explaining Korea’s (low) income inequality”. Quality primary education for all children had an equalizing effect, putting the majority of the population in a position to benefit from increased prosperity.
Just as basic education appears important in Brazil’s recent decline in inequality, it was vital for Korea in its early development. In the aftermath of the Korean War, the country placed great importance on universal primary education with a focus on literacy and numeracy. There was a focus on universal learning of core skills with a focus on getting all schools to a decent standard.
It was only when employers started demanding different skills – like ship building in the 1970s and 1980s– that compulsory education was expanded from 6 to 9 years. The chart below shows primary education spending as a priority for many years after higher levels of economic growth started.
Inequality and education: center stage in post-2015 debates
As the debates about the post-2015 development framework gather pace, there is growing debate about inequality and why it matters for development. But even if the argument that inequality matters is won, this will beg the question: what can policy makers actually do about it? How can more low income countries successfully grow with equity? There are no easy answers, but as a minimum, creating broad-based and equitable education systems with all children learning during primary school must be a central part of the response. Without education systems which ensure that all children are learning, shared economic growth is likely to remain elusive.
By Will Paxton