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Credit Constraints in Education: Evidence from International Data

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  • Mohamed Ben Mimoun

Abstract

This paper tests empirically the credit-constraints thesis by using cross-country data on secondary and higher-education enrolment rates. Contrary to some previous works in this direction, we find several pieces of evidence that support the importance of such a thesis. First, controlling for the effects of both economic development and educational inequality, we find that school enrolments are negatively correlated with income inequality and positively correlated with financial-market development. Second, these correlations are robust to the specific country-effects, the composition of the sample of countries, and the inclusion of public education expenditures. Finally, public education expenditures are significantly correlated with school enrolment ratios. Distinguishing developed countries from developing ones reveals that the effects of both social and material factors are larger in rich countries than in poor ones. Our estimation results also show that the way public expenditures are allocated across educational levels affects enrolment ratios in higher educational stages. Specifically, countries where expenditure allocations are biased in favour of the advanced stages of education at the expense of the basic levels also experience low enrolment ratios in the higher levels of education.

Suggested Citation

  • Mohamed Ben Mimoun, 2008. "Credit Constraints in Education: Evidence from International Data," Journal of Applied Economics, Taylor & Francis Journals, vol. 11(1), pages 33-60, May.
    • Handle: RePEc:taf:recsxx:v:11:y:2008:i:1:p:33-60
    DOI: 10.1080/15140326.2008.12040498
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    Cited by:

    1. Annika C. Froehlich, 2016. "Does the curricular structure affect doctoral enrolment?," Journal of Business Economics, Springer, vol. 86(9), pages 1067-1089, December.
    2. Zhang, Muyang & Chen, Jie, 2018. "Unequal school enrollment rights, rent yields gap, and increased inequality: The case of Shanghai," China Economic Review, Elsevier, vol. 49(C), pages 229-240.
    3. Mohamed Ben Mimoun & Asma Raies, 2010. "Public Education Expenditures, Human Capital Investment And Intergenerational Mobility: A Two‐Stage Education Model," Bulletin of Economic Research, Wiley Blackwell, vol. 62(1), pages 31-57, January.
    4. Juliana Arias & Alejandro Torres, 2018. "Economic efficiency of public secondary education expenditure: How different are developed and developing countries?," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 80(4), pages 119-154, February.

    More about this item

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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