What Factors Change Education Inequality in Nepal?

We estimate indices of income-based inequality of education for Nepal using comprehensive survey data from 1996 and 2004. The 5% increase in the inequality that we obtain for those eight years is then decomposed into its contributing factors. Greater urbanization contributed substantially to the rise in education inequality. On the other hand, income significantly reduced education inequality because of a substantial increase in mean income during the eight years, and because of a fall in income inequality. This implies that an increase in the median income could reduce education disparity substantially.