Role of education on income inequality in Thailand

Abstract

The objective of this research is to study the role of educational attainment, educational inequality, and quality of education on income inequality. The hypothesis is the higher educational level and quality of education, the lower income inequality, and the more dispersion of education, the higher inequality of income. This research used ordinary least square technique with cross sectional data of 76 provinces in Thailand, and pooled least square technique with a panel data set of thirteen educational service areas for four periods, 1996, 1998, 2000, and 2002. The regression results showed that educational factors play roles on income distribution. The higher educational attainment leads to the more inequality of income because an increase in educational attainment is an increase in higher educational level and most people who can access to higher education come from high income family. Thus, higher educational attainment widens income gaps between the rich and the poor during the period of study. The results also presented that the higher quality of education measured by higher expenditure on education could reduce inequality of income by raising marginal productivity and wages of low educated workers. However, educational inequality is insignificant. Moreover, this research also tested Kuznets hypothesis, but this data set cannot confirm the statistically significant relation between economic development and income inequality.