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Inequality & Education: Gini Index & 20/20 Ratio Study, Slides of Banking and Finance

The relationship between inequality and education, specifically focusing on the gini index and the 20/20 ratio. The study reveals that there is a close relationship between the two, with each ten-point increase in the gini index roughly doubling the 20/20 ratio. The document also examines the impact of inequality on public expenditure on education, expected years of schooling for girls, and secondary-school enrolment.

Typology: Slides

2012/2013

Uploaded on 07/29/2013

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bg1
y = -0.0799x + 2.1297
R
2
= 0.1968
-6
-4
-2
0
2
4
6
020 40 60 80
Gini index
Per capita growth 1965-98, adjusted for initial income
(% per year)
An increase in Gini
index by 12 points
goes along with a
decrease in per
capita growth by
almost 1% per year
r = -0.50
Growth and Inequality,
1965-98
Sweden
Thailand
Central
African
Republic
South Africa
France
Brazil
No
discernible
sign that
equality
stands in
the way of
economic
growth
Korea
Lesotho
r = rank
correlation
Docsity.com
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Download Inequality & Education: Gini Index & 20/20 Ratio Study and more Slides Banking and Finance in PDF only on Docsity!

y = -0.0799x + 2. R 2 = 0.

0

2

4

6

0 20 40 60 80

Gini index

Per capita growth 1965-98, adjusted for initial income

(% per year)

An increase in Gini index by 12 points goes along with a decrease in per capita growth by almost 1% per year

r = -0.

Growth and Inequality,

Sweden

Thailand

CentralAfrican Republic

South Africa

France

Brazil

No discernible sign that equality stands in the way of economic growth

Korea

Lesotho

r = rank correlation

The Gini Index and the

20/20 Ratio

The Gini index is closely related to the

20/20 ratio

 Gini = 25 ⇒ ratio = 3 (Nordic countries)  Gini = 30 ⇒ ratio = 4 (Germany)  Gini = 35 ⇒ ratio = 6 (Britain)  Gini = 40 ⇒ ratio = 8 (US, China, Russia)  Gini = 50 ⇒ ratio = 15 (Nigeria)  Gini = 60 ⇒ ratio = 26 (Brazil) Relationship between inequality and growth also holds for rich and poor separately

The Gini Index and the

20/20 Ratio

The Gini index is closely related to the

20/20 ratio

 Gini = 25 ⇒ ratio = 3 (Nordic countries)  Gini = 30 ⇒ ratio = 4 (Germany, Greece)  Gini = 35 ⇒ ratio = 6 (Britain)  Gini = 40 ⇒ ratio = 8 (US, China, Russia)  Gini = 50 ⇒ ratio = 15 (Nigeria)  Gini = 60 ⇒ ratio = 26 (Brazil)

Each ten-point increase in the Gini index roughly doubles the 20/20 ratio Docsity.com

The Gini Index and the

20/20 Ratio

The Gini index is closely related to the

20/20 ratio

 Gini = 25 ⇒ ratio = 3 (Nordic countries)  Gini = 30 ⇒ ratio = 4 (Germany, Greece)  Gini = 35 ⇒ ratio = 6 (Britain)  Gini = 40 ⇒ ratio = 8 (US, China, Russia)  Gini = 50 ⇒ ratio = 15 (Nigeria)  Gini = 60 ⇒ ratio = 26 (Brazil)

Each ten-point increase in the Gini index roughly doubles the 20/20 ratio Docsity.com

The Gini Index and the

20/20 Ratio

The Gini index is closely related to the

20/20 ratio

 Gini = 25 ⇒ ratio = 3 (Nordic countries)  Gini = 30 ⇒ ratio = 4 (Germany, Greece)  Gini = 35 ⇒ ratio = 6 (Britain)  Gini = 40 ⇒ ratio = 8 (US, China, Russia)  Gini = 50 ⇒ ratio = 15 (Nigeria)  Gini = 60 ⇒ ratio = 26 (Brazil)

Each ten-point increase in the Gini index roughly doubles the 20/20 ratio Docsity.com

The Gini Index and the

20/20 Ratio: Quite Close

y = 16,507Ln(x) + 5, R 2 = 0,

0

10

20

30

40

50

60

70

80

0 10 20 30 40 50 60 70 20/20 ratio

Gini coefficient

More on Education

Specifically, consider the relationship

between inequality and three

different measures of education

inputs, outcomes, and participation:

  1. Public expenditure on education
  2. Expected years of schooling for girls
  3. Secondary-school enrolment

Expenditure on Education

and Inequality

y = -2.3106x + 51. R^2 = 0. 0

10

20

30

40

50

60

70

0 2 4 6 8 10 Public expenditure on education 1980-97 (% of GNP)

Gini coefficient An increase in public expenditure on education by 1% of GNP is associated with a 2. point decrease in Gini.

r = -0.

74 countries

Years of Schooling and

Inequality

y = -0.8641x + 49. R 2 = 0. 0

10

20

30

40

50

60

70

0 5 10 15 20 Years of schooling for fem ales 1980-

Gini coefficient^ An increase by oneyear in the schooling that girls can expect is associated with a decrease of almost one point on the Gini scale.

r = -0.

46 countries

Years of Schooling and

Economic Growth

y = 0.2576x - 3. R^2 = 0.

0

2

4

6

0 5 10 15 20

Years of schooling for females 1980-97 (ár)

Per capita economic growth 1965-98, adjusted for

initial income (% per year)

49 countries

r = 0.

An increase by four years in the schooling that girls can expect is associated with an increase in per capita growth by 1% per year.

Secondary Enrolment

and Economic Growth

y = 0.0407x - 3. R^2 = 0.

0

2

4

6

0 20 40 60 80 100 120

Secondary-school enrolment 1980-97 (% af árgangi)

Per capita economic growth 1965-98, adjusted for

initial income (% per year) An 25 point increase in secondary-school enrolment goes along with an increase in per capita growth by 1% per year. 87 countries

r = 0.

Secondary Enrolment

and Growth, Again

0

2

4

6

0 20 40 60 80 100 120

Secondary-school enrolment 1980-97 (% of cohort)

Per capita economic growth 1965-98, adjusted

for initial income (% per year)

Thailand Japan Finland

Ghana^ Jamaica Positive but diminishing returns to education

An 25 point increase in secondary-school enrolment goes along with an increase in per capita growth by 1% per year.

r = 0.

One Possible

Interpretation of Results

Growth

Inequality

Growth

Education

Inequality

Education

Another Possible

Interpretation

Growth

Education

Growth

Inequality

Education

Inequality