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The Market Value of Public Education: A Comparison of Three Valuation Methods


  • Sergei Soares

    (Center for Global Development)


In this paper, I will compare three methods to value education services and their distributive impact. These methods are: the Cost of Provision approach, according to which public schooling is worth what it costs the state to produce it; the Labor Market approach, according to which a year of schooling is worth the present value of the additional lifetime income it brings; and the Private Educational Market approach, according to which a year in a public school is worth what it would cost in an equivalent private school. For each method, I will calculate the total value of public educational services by level as well as their impact upon income inequality, as measured by the Gini Coefficient of per capita household income. I will apply each method to Brazil, a country for which educational, expenditure, and income distribution data are both good quality and easily available. The results are surprisingly invariant across methods: (i) the value of all public schooling varies from 6% to 7% of incomes with the Cost of Provision providing the lowest estimates and the Labor Market Method the highest; and (ii) with the exception of higher education, public schooling is highly distributive and all public educational services reduce the Gini Coefficient by about 3 to 4 Gini points.

Suggested Citation

  • Sergei Soares, 2018. "The Market Value of Public Education: A Comparison of Three Valuation Methods," Commitment to Equity (CEQ) Working Paper Series 71, Tulane University, Department of Economics.
  • Handle: RePEc:tul:ceqwps:71

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    More about this item


    valuation of educational services; value of public education; distributional aspect of public education; hedonic prices; educational rates of return; costs of education;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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