Quotation Prettner, Klaus, Schäfer, Andreas. 2021. The U-shape of income inequality over the 20th century: The role of education. Scandinavian Journal of Economics. 123 645-675.




We propose an overlapping generations model with three social classes to investigate the effects of higher education on the evolution of inequality. Initially, no social class invests in higher education, and inequality is driven by wealth accumulation/bequests. Once the rich surpass a certain income threshold, they invest in higher education, and their children’s incomes start to grow faster. Over time, the middle class and potentially the poor follow suit. Overall, this framework provides a candidate explanation for i) the U‐shaped evolution of income inequality, ii) the fall and rise of inheritance flows, and iii) differential investments in higher education.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Scandinavian Journal of Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, VW-C, WH-B
Language English
Title The U-shape of income inequality over the 20th century: The role of education
Volume 123
Year 2021
Page from 645
Page to 675
Reviewed? Y
URL https://onlinelibrary.wiley.com/doi/10.1111/sjoe.12424
DOI https://doi.org/10.1111/sjoe.12424
Open Access N


Prettner, Klaus (Details)
Schäfer, Andreas (University of Bath, United Kingdom)
Department of Economics (Crespo Cuaresma) (Details)
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