Education expansion and income inequality: evidence from Poland (2005–2019)

In Poland, between 2005 and 2019, the share of the employed with tertiary education among men increased by about 10 percentage points and among women by about 18 percentage points. We study the impact of this change on relative income poverty and income inequality using a microsimulation decomposition based on a tax-benefit microsimulation model. We show that the educational change reduced poverty and income inequality incidence and depth. Using a microsimulation approach, we estimate that the impact of the abovementioned educational change on the changing material poverty risk corresponds to 40% of the policy effect associated with changes in tax and benefit regulations. For the Gini index, the educational effect amounted to 91% of the policy effect. The results show that educational changes in Poland between 2005 and 2019 have significantly reduced income inequality and the risk of material poverty.