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Abstract

While the effect of various types of government expenditures on income inequality has been studied extensively, whether education expenditures impacts income inequality is less clear. The purpose of this paper is to examine the relationship between education expenditures and income inequality. Specifically, I explore the impact of tertiary versus primary and secondary education spending on income inequality using panel data for 50 US states over the period 1987-2015. Using an ordinary least squares model with time and state fixed effects, I find that total and disaggregated education expenditures have a significant inequality-reducing effect on the income distribution. The findings support continued spending policies at all levels of education as a way to reduce income inequality.

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