Public education spending and school outcomes: Insights from quantile regression

The literature on the empirical link between public spending and school outcomes has yielded mixed and largely debated results. Given the current education landscape, where enrolment has improved considerably, it is crucial to reexamine how public spending impacts school performance across different quantiles. To this end, this study employed panel data from low- and lower-middle-income countries (LMICs) from 1990 to 2021 to investigate how public education spending impacts the relationship. It finds that public spending significantly affects enrolment at the median and higher quantiles at pre-primary schools but has an insignificant relationship in low-enrolling countries. The study also finds that spending positively and substantially influences primary school enrolment across all quantiles. Still, it negatively impacts dropout rates, with significant coefficients only in the 50th and higher quantiles. The relationship, however, was statistically insignificant in countries with the lowest dropout rates. While the ineffectiveness of public spending in further reducing school dropout rates in countries with the lowest out-of-school children is obvious, investigating why spending is ineffective during early childhood in low-enrolling countries is an important area for future research.