Global Inequality in a more educated world

Abstract

Better-educated and younger cohorts from developing countries are entering the global labor market. This education wave is altering the skill and geographic composition of the global labor market, and impacting income distribution, at the national and global levels. This paper analyzes how this education wave reshapes global inequality over the long run using a general-equilibrium macro-micro simulation framework that covers harmonized household surveys for almost 90% of the world population. The findings suggest that global income inequality will likely decrease by 2030. The expanding supply of better educated workers from developing countries will be a key factor, especially in supporting the reduction of income disparities between countries. The education wave will also minimize, mainly for developing countries, increases of within-country inequality linked to technological progress and its widening of wage premia.