Progressivity, Sorting, and the Measurement of In-Kind Public Transfers: The Case of Education

Conventional benefit-incidence analyses often find public education spending to be progressive, particularly at basic and secondary levels. However, in systems with substantial private provision, measured progressivity may partly reflect income-based sorting between public and private schools rather than redistributive features of public spending itself. This paper refines the interpretation of standard progressivity measures by explicitly accounting for such sorting. Focusing on public secondary education in Argentina, we exploit cross-provincial variation in private school participation to decompose observed progressivity into a mechanical component driven by differential take-up and a structural component reflecting spending design and unit costs. Using a transparent counterfactual reweighting approach, we show that income-based sorting plays a quantitatively important and heterogeneous role across provinces, in some cases inflating and in others attenuating measured progressivity. Once sorting effects are accounted for, cross-provincial differences in progressivity are substantially reduced and provincial rankings change meaningfully. These findings underscore the importance of enrollment patterns for the measurement of the distributive incidence of in-kind public spending and provide a simple adjustment that can be readily incorporated into standard fiscal incidence analyses.