Authors
1 Assistant Professor of Economics
2 mfamkar@gmail.com
Abstract
This paper examines the association of income inequality and economic growth with public expenditures on education as an intermediary factor in Iran. Time series data from 1974-2005 and two stage least squares (2sls) method are used to estimate a simultaneous equation system. Public expenditures on education and economic growth are dependent variables and population density, human capital, past public expenditures on education and income inequality are considered as explanatory variables in the model. The results are as follows:
1-There is a negative association between income inequality and economic growth with or without public expenditures on education as an intermediary factor.
2-Public expenditures on education are negatively associated with economic growth.
3-Although the sign of past public expenditures on education with public expenditures as an intermediary factor is positive, but the coefficient of past public expenditures on education is not significant in the growth rate equation. So a judgement can not be made about its relationship with economic growth.
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