The role of education inequality in the growth-volatility relationship in MENA region

Abstract

The main objective of this paper is to investigate the impact of education inequality on the growth-volatility relationship for 12 MENA countries over the period 1970-2010. The study measured inequality of education by calculating an Education Gini Index, then estimate volatility using GARCH model. In order to achieve the main objective of this study, two different econometric techniques have been used- Generalized Method of Moments and the Pooled Mean Group- ARDL estimator. Then we compared the results of the two techniques. The empirical analysis shows that education inequality affects growth negatively. While the volatility has a positive impact on growth, its interaction with education inequality has a negative impact. These results suggest that when policymakers decide to increase investment in education, even during economic downturns, they should take into account the equal distribution of educational services.