The Granger-causality between income and educational inequality: a spatial cross-regressive VAR framework

Abstract

This paper tests the causal processes between income and educational inequality within regions of the European Union, using a spatial cross-regressive VAR framework. The results show that there is a heterogeneous causality from income inequality to educational inequality and vice versa, and interregional income and educational externalities are relevant to this causality. This finding raises potentially interesting economic policy implications.