Education Reduces Poverty

Education reduces poverty through economic development in economies that use this resource to make its economy more skilled. Specifically, it helps the poor in developing countries and not just a wealthy elite.

This article quantifies the role played by education in the reduction of global poverty. I propose tools for identifying the contribution of schooling to economic growth by income group, integrating imperfect substitution between skill groups into macroeconomic growth decomposition. I bring this “distributional growth accounting” framework to the data by exploiting a new microdatabase representative of nearly all of the world’s population, new estimates of the private returns to schooling, and historical income distribution statistics. 

Education can account for about 45% of global economic growth and 60% of pretax income growth among the world’s poorest 20% from 1980 to 2019. A significant fraction of these gains was made possible by skill-biased technical change amplifying the returns to education. Because they ignore the distributional effects of schooling, standard growth accounting methods substantially underestimate economic benefits of education for the global poor.

Amory Gethin, "Distributional Growth Accounting: Education and the Reduction of Global Poverty, 1980-2019" The Quarterly Journal of Economics, qjaf033 (July 22, 2025).