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Globalization, Redistribution, and the Composition of Public Education Expenditures

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Listed author(s):
  • Thushyanthan Baskaran
  • Zohal Hessami

Abstract

We analyze whether globalization affects the composition of public expenditures for education by integrating arguments from the Heckscher-Ohlin and the tax competition literature into a common theoretical framework. The model suggests that with increasing global integration, developing countries have strong incentives to shift public education expenditures towards lower education. In industrialized countries, on the other hand, globalization has an ambiguous effect on the composition of public education expenditures. We test and confirm these hypotheses with data on 86 countries over the 1999-2006 period.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2917.

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Date of creation: 2010
Handle: RePEc:ces:ceswps:_2917
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Keywords: globalization; public education; composition of public spending;

Find related papers by JEL classification:

  • F15 - International Economics - - Trade - - - Economic Integration
  • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
  • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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  1. Hanushek, Eric A. & Leung, Charles Ka Yui & Yilmaz, Kuzey, 2003. "Redistribution through education and other transfer mechanisms," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1719-1750, November.
  2. Lee, Dwight R. & McKenzie, Richard B., 1989. "The International Political Economy of Declining Tax Rates," National Tax Journal, National Tax Association, vol. 42(1), pages 79-83, March.
  3. Nicolas Couderc, 2007. "GRUBBS: Stata module to perform Grubbs' test for outliers," Statistical Software Components S456803, Boston College Department of Economics, revised 29 Jan 2007.
  4. Axel Dreher & Jan-Egbert Sturm & Heinrich Ursprung, 2008. "The impact of globalization on the composition of government expenditures: Evidence from panel data," Public Choice, Springer, vol. 134(3), pages 263-292, March.
  5. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
  6. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
  7. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
  8. Panu Poutvaara & Vesa Kanniainen, 2000. "Why Invest in Your Neighbor? Social Contract on Educational Investment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 547-562, August.
  9. Hans-Werner Sinn, 2005. "Migration and Social Replacement Incomes: How to Protect Low-Income Workers in the Industrialized Countries Against the Forces of Globalization and Market Integration," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 375-393, August.
  10. Axel Dreher, 2002. "Does Globalization Affect Growth?," Development and Comp Systems 0210004, EconWPA, revised 04 Feb 2003.
  11. Devereux, Michael P. & Lockwood, Ben & Redoano, Michela, 2008. "Do countries compete over corporate tax rates?," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1210-1235, June.
  12. Andersson, Fredrik & Konrad, Kai A., 2003. "Human capital investment and globalization in extortionary states," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1539-1555, August.
  13. Rudra, Nita, 2002. "Globalization and the Decline of the Welfare State in Less-Developed Countries," International Organization, Cambridge University Press, vol. 56(02), pages 411-445, March.
  14. Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
  15. Andersen, Torben M., 2005. "Migration, taxation and educational incentives," Economics Letters, Elsevier, vol. 87(3), pages 399-405, June.
  16. Hans-Werner Sinn, 2004. "The New Systems Competition," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(1), pages 23-38, 02.
  17. Lee, Dwight R. & McKenzie, Richard B., 1989. "The International Political Economy of Declining Tax Rates," National Tax Journal, National Tax Association, vol. 42(1), pages 79-83, March.
  18. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57, November.
  19. Alexander Haupt & Eckhard Janeba, 2009. "Education, redistribution and the threat of brain drain," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(1), pages 1-24, February.
  20. Cameron A. Shelton, 2007. "The Size and Composition of Government Expenditure," Wesleyan Economics Working Papers 2007-002, Wesleyan University, Department of Economics.
  21. Benarroch, Michael & Pandey, Manish, 2008. "Trade openness and government size," Economics Letters, Elsevier, vol. 101(3), pages 157-159, December.
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