A Spatial Econometrics Analysis of Educational Distribution and Regional Income Disparities in Nigeria

Understanding the determinants of regional economic disparities is essential to designing an effective policy framework to address regional inequalities and their disruptive potentials. The role of educational attainment in the regional income determination has been widely investigated in the economic literature. So far, less attention has been given to the importance of educational distribution in regional income determination. To contribute in this respect, this paper developed a regional production function model that incorporates education inequality as a determinant of regional income disparity in Nigeria. Using micro data from the recent Living standard measurement survey (LSMS) on Nigeria, we calculate inequality of education using Theil index. The contribution of each region to the overall inequality obtained from the Theil index is considered. Employing a cross sectional spatial econometric approach, we found evidence that more equal distribution of education has significant and positive effects on regional per capita income. Interestingly, education distribution out performs educational attainment in the model. The results also confirm the role of education inequality in accounting for regional income differences in Nigeria. We conclude that investing for equitable distribution in education will be an effective policy to reduce regional disparities in Nigeria as well as an efficient means to promote economic development.