In Europe, and Central Asia, the poorfaces three problems: 1) the education system as a wholedoes not work well, and hence fails to meet adequately theirneeds; 2) the private cost of education has gone up, so that"education", as a commodity, competes with otherconsumption goods in shrinking household budgets; and, 3)the perceived benefits of education (in terms of higher wageearning) are still low, thereby undermining long-termincentives to invest in education. The paper shows thediscrepancy between Central European, and Former SovietUnion countries in the contribution of "education"for explaining wage earnings inequality. The discrepancy canbe explained by factors such as the degree of private sectordevelopment, and the flexibility of the labor market.Although there remains a "taste" for education inEurope and Central Asia, there is also a risk thatlow-income groups, drop out of the education system, andirreversibly fall into poverty.