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

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  • Sergei Soares

    (Center for Global Development)

Abstract

Publicly provided education is both an important public expenditure and a relevant in-kind transfer, often to the poorest households. This paper compares three methods to value education services and their distributive impact. The methods are: (i) The first method is cost of provision, according to which education is worth what it costs the state to provide it; (ii) The second method is to value educational services using the labor market as the measure of their worth; (iii) The third is to match private educational expenditures, paid for by students or their parents, with equivalent public education services, and then value the latter according to the price of the former. The results from all three approaches do not fall far from each other. The imputed income from publicly provided education reduces inequality by between 3 and 4 Gini points and increases incomes by about 6%. My conclusion is that the value of public education in Brazil is close to 6% of household income and it is quite distributive, whatever the valuation method used.

Suggested Citation

  • Sergei Soares, 2019. "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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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq71.pdf
    File Function: Revised version, 2019
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    More about this item

    Keywords

    educational service valuation; inequality; education; welfare; returns to education; hedonic pricing;

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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