Exploring the long term effects of educational policies on the income redistribution processes

Public finance of post-compulsory education modifies substantially the supply of educational qualifications. Such modification has crucial implications for the long-term income distribution processes: in a context of sustained increases of demand for educational qualifications (brought about by various factors, among which the incorporation of new technologies and international competition may be emphasized), growth in supply reduces the increasing trend of the educational wage premium, contributing, thus, to control the enlargement of primary income inequality. This long-term effect combines with the rest of redistributive effects generated by educational policies and, more specifically, by public finance. In this paper the mentioned long-term effects are tackled, both from a methodological perspective and from a comparative analysis applied to developed countries. The Luxembourg Income Study (LIS) databases, together with the European Community Household Panel (ECHP) database (for Spain) were used in the empirical work.