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Background <p>This study contributes to Sustainable Development Goal 10, which aims to reduce income inequality within and across countries, by investigating whether military expenditure weakens the redistributive effect of education expenditure in 30 NATO member states from 1990 to 2022.</p> Methods <p>The analysis employs the two-step System GMM estimator to address potential endogeneity, and bootstrap quantile regression to capture heterogeneous effects across the income distribution. A margin plot analysis is also used to examine how changes in military expenditure alter the conditional effect of education expenditure on inequality.</p> Results <p>The findings show that both education and military expenditures individually reduce income inequality. However, their interaction increases inequality, indicating that rising military expenditure dampens the redistributive impact of education expenditure. The interaction effect is positive and statistically significant at lower quantiles (Q10–Q50), suggesting stronger inequality-enhancing effects among lower-income groups. Margin plot evidence further demonstrates that the conditional effect of education expenditure becomes positive as military expenditure increases.</p> Conclusion <p>The results underscore the need for governments to balance military and education budgets to avoid undermining the inequality reducing benefits of education expenditure.</p>

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Does military expenditure weaken the effect of education expenditure in reducing income inequality? evidence from NATO countries

  • 期刊论文

  • 发表日期：

    2025年12月6日

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  • Gift Mbewe,
  • Yanzhi Zhao,
  • Chuanzhong Tang

摘要

Background

This study contributes to Sustainable Development Goal 10, which aims to reduce income inequality within and across countries, by investigating whether military expenditure weakens the redistributive effect of education expenditure in 30 NATO member states from 1990 to 2022.

Methods

The analysis employs the two-step System GMM estimator to address potential endogeneity, and bootstrap quantile regression to capture heterogeneous effects across the income distribution. A margin plot analysis is also used to examine how changes in military expenditure alter the conditional effect of education expenditure on inequality.

Results

The findings show that both education and military expenditures individually reduce income inequality. However, their interaction increases inequality, indicating that rising military expenditure dampens the redistributive impact of education expenditure. The interaction effect is positive and statistically significant at lower quantiles (Q10–Q50), suggesting stronger inequality-enhancing effects among lower-income groups. Margin plot evidence further demonstrates that the conditional effect of education expenditure becomes positive as military expenditure increases.

Conclusion

The results underscore the need for governments to balance military and education budgets to avoid undermining the inequality reducing benefits of education expenditure.