The Rich or the Poor: Who Gains from Public Education Spending in Ghana?

This paper examines the incidence of public education subsidies in Ghana. Since the late 1990s, Ghana’s government has increasingly recognised human capital as a cornerstone to alleviating poverty and income inequality, causing dramatic increases of government expenditures to the education sector. At the same time user fees have been introduced in higher education while basic education is being made progressively free. The question then is, whether these spending increases have been effective in reaching the poor and to what extent? What factors influence the poor’s participation in the public school system? We attempt to address these issues, employing the standard benefit incidence methods and the willingness-to-pay method using a nested multinomial logit model. The results give a clear evidence of progressivity with consistent ordering: pre- schooling and primary schooling are the most progressive, followed by secondary, and then tertiary. The poorest quintile gains 14.8% of total education benefts in 2005 compared to the richest quintile benefit of 26.3%. Own price and income elasticities are higher for private schools than public schools and for secondary than basic schools.