Educational Expansion and Declining Expenditure Inequality in Nepal Over the Past Two Decades

ABSTRACT Nepal has made significant progress in reducing inequality in economic well‐being. Meanwhile education has expanded substantially. This study analyzes the role of educational expansion in reducing expenditure inequality using data from the three rounds of the Nepal Living Standards Survey. It conducts a two‐stage hierarchical inequality decomposition analysis by location and education. The expansion of basic education in rural areas contributed significantly to reducing overall inequality. The government should further promote basic education, while improving its quality and enhancing the socioeconomic status of households. The government should also develop socioeconomic infrastructure and establish efficient transportation networks throughout the country.