Human Capital Inequality and Income Inequality: Testing for Causality

Posted: 22 Jun 2018

See all articles by Dr. Muhammad Irfan Chani

Dr. Muhammad Irfan Chani

COMSATS University Islamabad

Sajjad Ahmad Jan

Independent

Zahid Pervaiz

National College of Business Administration and Economics (NCBA&E)

Amatul R. Chaudhary

National College of Business Administration and Economics (NCBA&E)

Date Written: January 1, 2014

Abstract

This study investigates the causal relationship between human capital inequality and income inequality in case of Pakistan. The annual time series data ranging from 1973 to 2009 is used for econometric analysis. Johanson co-integration and Granger Causality tests are used to confirm the existence of long run relationship and the causal relationship between human capital inequality and income inequality. The results indicate that there is positive relationship between the two types of inequalities in the long run. The estimates of causality test indicate that income inequality causes the human capital inequality but human capital inequality does not cause income inequality. Policy initiatives to reduce income inequality may empower people economically to avail skill building opportunities and accumulate their human capital through access to educational services.

Suggested Citation

Chani, Muhammad Irfan and Jan, Sajjad Ahmad and Pervaiz, Zahid and Chaudhary, Amatul R., Human Capital Inequality and Income Inequality: Testing for Causality (January 1, 2014). Available at SSRN: https://ssrn.com/abstract=2385641

Muhammad Irfan Chani

COMSATS University Islamabad ( email )

Mailsi Road
Off Multan Road
Vehari, Punjab
Pakistan

HOME PAGE: http://ww3.comsats.edu.pk/faculty/FacultyDetails.aspx?Uid=19095

Sajjad Ahmad Jan

Independent ( email )

No Address Available

Zahid Pervaiz (Contact Author)

National College of Business Administration and Economics (NCBA&E) ( email )

40/E-1, Gulberg-III
National College of Business Administration & Econ
Lahore, Punjab
Pakistan

Amatul R. Chaudhary

National College of Business Administration and Economics (NCBA&E) ( email )

40/E-1, Gulberg-III
National College of Business Administration & Econ
Lahore, Punjab 54660
Pakistan

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