Discrete stochastic dynamics of income inequality in education: An applied stochastic model and a case study

Abstract

This paper develops a model for the discrete stochastic dynamics of economic inequality-induced outcomes in education and demonstrates, in the context of the Turkish higher education sector, that higher incomes lead to higher performance levels; and hence income inequality matters. The paper formulates a stochastic subsidy policy that could help the sector to escape the low performance equilibria, and that could stabilize the sector at relatively higher performance levels.