The U-shape of income inequality over the 20th century: The role of education

Klaus Prettner, Andreas Schaefer

Research output: Contribution to journalArticlepeer-review

3 Citations (SciVal)
124 Downloads (Pure)


We propose an overlapping generations model with three social classes to investigate the effects of higher education on the evolution of inequality. Initially, no social class invests in higher education and inequality is driven by wealth accumulation/bequests. Once the rich surpass a certain income threshold, they invest in higher education and theirchildren’s incomes start to grow faster. Over time, the middle class and potentially the poor follow suit. Overall, this framework provides a candidate explanation for i) the U-shaped evolution of income inequality, ii) the fall and rise of inheritance flows, and iii) differential investments in higher education.
Original languageEnglish
Pages (from-to)645-675
Number of pages31
JournalThe Scandinavian Journal of Economics
Issue number2
Early online date17 Aug 2020
Publication statusPublished - 30 Apr 2021


  • Bequests
  • differential education
  • evolution of inequality
  • growth regime switch
  • human capital accumulation

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'The U-shape of income inequality over the 20th century: The role of education'. Together they form a unique fingerprint.

Cite this