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An Empirical Analysis of the Impact of Public Expenditures on Education and Health on Poverty in Indian States

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  • Raghbendra Jha

    ()
    (Australian National University)

  • Bagala Biswal

    ()
    (Memorial University and Queen’s University)

  • Urvashi D. Biswal

    (Queen’s University)

Abstract

The principal objective of this study is to test whether public expenditures on education, health and other development activities have been effective in reducing poverty in India. To ensure sensitivity and robustness of the results, three different measures of poverty belonging to the Foster-Greer-Thorbecke group of poverty measures are used. We consider various types of education expenditures, viz., government expenditures on elementary, secondary, higher/university and "other" levels. Data for fourteen Indian states from 13th to 53rd rounds of National Sample Survey of India are used for estimating poverty. Using unbalanced panel data techniques, we test Fixed effects, Random effects and OLS models, and conclude that education, health and development expenditures help reduce poverty. In particular, expenditure on higher, university, technical, adult and vocational educations as opposed to elementary and secondary education is more effective in poverty reduction. Several policy conclusions are advanced.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_998.pdf
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 998.

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Length: 30 pages
Date of creation: Mar 2001
Date of revision:
Handle: RePEc:qed:wpaper:998

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Keywords: India; Poverty Indices; Public Expenditures on Education and Health; Fixed and Random Effect Models; Panel Data;

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  1. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 239-53, January.
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  3. Alan B. Krueger & Mikael Lindahl, 1999. "Education for Growth in Sweden and the World," NBER Working Papers 7190, National Bureau of Economic Research, Inc.
  4. Dale W. Jorgenson, 1998. "Did We Lose the War on Poverty?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 79-96, Winter.
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  7. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-61, March.
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  9. Christina D. Romer & David H. Romer, 1999. "Monetary policy and the well-being of the poor," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 21-49.
  10. Besley, Timothy & Coate, Stephen, 1995. "The Design of Income Maintenance Programmes," Review of Economic Studies, Wiley Blackwell, vol. 62(2), pages 187-221, April.
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  13. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  14. Subramanian, S. & Deaton, A., 1994. "The Demand for Food and Calories," Papers 175, Princeton, Woodrow Wilson School - Development Studies.
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  16. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March.
  17. Jha, Raghbendra, 2002. "Reducing Poverty and Inequality in India: Has Liberalization Helped?," Departmental Working Papers 2002-04, The Australian National University, Arndt-Corden Department of Economics.
  18. Katherine Cuff, 1998. "Optimality of Workfare with Heterogeneous Preferences," Working Papers 968, Queen's University, Department of Economics.
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Cited by:
  1. Bhattacharya, Haimanti & Innes, Robert, 2006. "Is There a Nexus between Poverty and Environment in Rural India?," 2006 Annual meeting, July 23-26, Long Beach, CA 21201, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. 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.

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