Analysis on the difference between public education and social security in regulating income distribution

This paper has adopted an OLG Model to study the regulatory mechanism of public education and social security on income distribution. According to the research, public education can effectively narrow the gap in educational investment among families, and thereby reduce income disparity. Social security can bring down income disparity by reducing the labor supply and increasing effective family instructional time of low-income families. According to numerical simulation, at the same expenditure level, the capability of public education in regulating income disparity is much stronger than social security. When budget scale is relatively small, the priority shall be given to public education expenditure to reduce income disparity; when the budget scale is relatively large, the balance shall be established between expenditure on public education and social security.