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Composition of Government Expenditures and Demand for Education in Developing Countries

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Author Info
Era Dabla-Norris
John Matovu
Abstract

This paper addresses the potential effects on human capital accumulation and economic growth of the alternative compositions of public expenditures in the context of a computable dynamic general equilibrium model of overlapping generations and heterogeneous agents in which altruistic parents make schooling decisions for their children. In the presence of fixed and variable costs for different levels of schooling, we show that reducing household costs of primary education has the largest positive impact on growth and poverty reduction in the short run. Moreover, an increase in higher education spending increases long-run growth. These effects can be substantial even when increasing education spending comes at the expense of public infrastructure investment.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/78.

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Length: 47 pages
Date of creation: 20 May 2002
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Handle: RePEc:imf:imfwpa:02/78

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Keywords: Government expenditures ; Education ; Economic growth ; Developing countries ;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Susan M. Collins & Barry P. Bosworth, 1996. "Economic Growth in East Asia: Accumulation versus Assimilation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-2), pages 135-204. [Downloadable!]
  2. Sawada, Yasayuki & Lokshin, Michael, 2001. "Household schooling decisions in rural Pakistan," Policy Research Working Paper Series 2541, The World Bank. [Downloadable!]
  3. Judson, Ruth, 1998. " Economic Growth and Investment in Education: How Allocation Matters," Journal of Economic Growth, Springer, vol. 3(4), pages 337-59, December. [Downloadable!] (restricted)
  4. James J. Heckman, 1999. "Accounting for Heterogeneity, Diversity, and General Equilibriumin Evaluating Social Programs," NBER Working Papers 7230, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Verner, Dorte, 1999. "Wage and productivity gaps - evidence from Ghana," Policy Research Working Paper Series 2168, The World Bank. [Downloadable!]
  6. Canagarajah, Sudharshan & Coulombe, Harold, 1997. "Child labor and schooling in Ghana," Policy Research Working Paper Series 1844, The World Bank. [Downloadable!]
  7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February. [Downloadable!] (restricted)
    Other versions:
  9. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank. [Downloadable!]
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  10. James Davies & John Whalley, 1989. "Taxes and Capital Formation: How Important is Human Capital?," NBER Working Papers 2899, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Behrman, Jere R & Birdsall, Nancy, 1983. "The Quality of Schooling: Quantity Alone is Misleading," American Economic Review, American Economic Association, vol. 73(5), pages 928-46, December. [Downloadable!] (restricted)
  12. Glewwe, Paul, 1996. "The relevance of standard estimates of rates of return to schooling for education policy: A critical assessment," Journal of Development Economics, Elsevier, vol. 51(2), pages 267-290, December. [Downloadable!] (restricted)
  13. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352. [Downloadable!] (restricted)
  14. Jacoby, Hanan G & Skoufias, Emmanuel, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Blackwell Publishing, vol. 64(3), pages 311-35, July. [Downloadable!] (restricted)
  15. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-50, April. [Downloadable!] (restricted)
  16. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. Glomm, Gerhard, 1997. "Parental choice of human capital investment," Journal of Development Economics, Elsevier, vol. 53(1), pages 99-114, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Rossana Patrón, 2006. "Enhancing the Public Provision of Education: The Economics of Education Reform in Developing Countries," Documentos de Trabajo (working papers) 1106, Department of Economics - dECON. [Downloadable!]
  2. Verbina, Inna & Chowdhury, Abdur R., 2002. "What Determines Public Education Expenditures in a Transition Economy?," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  3. Paternostro, Stefano & Rajaram, Anand & Tiongson, Erwin R., 2005. "How does the composition of public spending matter?," Policy Research Working Paper Series 3555, The World Bank. [Downloadable!]
  4. Mogues, Tewodaj & Ayele, Gezagehn & Paulos, Zelekawork & Fan, Shenggen, 2006. "How Effective is Public Spending? Public Investment Composition and Rural Welfare in Ethiopia," 2006 Annual meeting, July 23-26, Long Beach, CA 21258, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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