IDEAS home Printed from https://ideas.repec.org/p/tul/ceqwps/88.html
   My bibliography  Save this paper

Redistribution Through Education: The Value of Public Education Spending

Author

Listed:
  • Sergio Urzua

    (Department of Economics at the University of Maryland)

Abstract

This chapter assesses how publicly funded education affects the income distribution. It discusses and compares different approaches to measuring the consequences of government education spending. The empirical quantification of the private returns to education, the estimation of the elasticity of school enrollment to public spending in the sector, and the identification of ageearnings profiles are the building blocks of the analysis. The methods are implemented using aggregate level data and cross-sectional household surveys from Chile and Ghana. Real-world data limitations are taken into account. From the country comparison, we identify differences in how families demand education, how labor markets “value” human capital, and how public initiatives might shape income inequality and poverty. The analysis illustrates the extent to which conventional incidence analysis informs about the distributional effects of fiscal expenditure on education.

Suggested Citation

  • Sergio Urzua, 2019. "Redistribution Through Education: The Value of Public Education Spending," Commitment to Equity (CEQ) Working Paper Series 88, Tulane University, Department of Economics.
  • Handle: RePEc:tul:ceqwps:88
    as

    Download full text from publisher

    File URL: http://repec.tulane.edu/RePEc/ceq/ceq88.pdf
    File Function: First version, 2019
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James J. Heckman & John Eric Humphries & Gregory Veramendi, 2018. "The Nonmarket Benefits of Education and Ability," Journal of Human Capital, University of Chicago Press, vol. 12(2), pages 282-304.
    2. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April.
    3. Heckman, James J. & Humphries, John Eric & Veramendi, Gregory & Urzua, Sergio, 2014. "Education, Health and Wages," IZA Discussion Papers 8027, Institute of Labor Economics (IZA).
    4. Mahdi Barouni & Stijn Broecke, 2014. "The Returns to Education in Africa: Some New Estimates," Journal of Development Studies, Taylor & Francis Journals, vol. 50(12), pages 1593-1613, December.
    5. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    6. Carolina González-Velosa & Graciana Rucci & Miguel Sarzosa & Sergio Urzúa, 2015. "Returns to Higher Education in Chile and Colombia," IDB Publications (Working Papers) 88676, Inter-American Development Bank.
    7. Castro-Leal, Florencia & Dayton, Julia & Demery, Lionel & Mehra, Kalpana, 1999. "Public Social Spending in Africa: Do the Poor Benefit?," The World Bank Research Observer, World Bank Group, vol. 14(1), pages 49-72, February.
    8. Sergio Urzúa, 2008. "Racial Labor Market Gaps: The Role of Abilities and Schooling Choices," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    9. Burton A. Weisbrod, 1962. "Education and Investment in Human Capital," NBER Chapters, in: Investment in Human Beings, pages 106-123, National Bureau of Economic Research, Inc.
    10. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1593-1660.
    11. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts," NBER Working Papers 6385, National Bureau of Economic Research, Inc.
    12. Burton A. Weisbrod, 1962. "Education and Investment in Human Capital," Journal of Political Economy, University of Chicago Press, vol. 70, pages 106-106.
    13. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 7, pages 307-458, Elsevier.
    14. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    15. Santiago Acerenza & Néstor Gandelman, 2019. "Household Education Spending in Latin America and the Caribbean: Evidence from Income and Expenditure Surveys," Education Finance and Policy, MIT Press, vol. 14(1), pages 61-87, Winter.
    16. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
    17. Santiago Acerenza & Néstor Gandelman, 2017. "Household Education Spending in Latin America and the Caribbean: Evidence from Income and Expenditure Surveys," IDB Publications (Working Papers) 98120, Inter-American Development Bank.
    18. González-Velosa, Carolina & Rucci, Graciana & Sarzosa, Miguel & Urzúa, Sergio, 2015. "Returns to Higher Education in Chile and Colombia," IDB Publications (Working Papers) 6858, Inter-American Development Bank.
    19. Loreto Reyes & Jorge Rodríguez & Sergio S. Urzúa, 2013. "Heterogeneous Economic Returns to Postsecondary Degrees: Evidence from Chile," NBER Working Papers 18817, National Bureau of Economic Research, Inc.
    20. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281-281.
    21. Jorge Luis García & James J. Heckman & Duncan Ermini Leaf & María José Prados, 2016. "The Life-cycle Benefits of an Influential Early Childhood Program," NBER Working Papers 22993, National Bureau of Economic Research, Inc.
    22. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
    23. Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-920, November.
    24. Stephen D. Younger & Eric Osei-Assibey & Felix Oppong, 2017. "Fiscal Incidence in Ghana," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 47-66, November.
    25. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    26. Maria Marta Ferreyra & Ciro Avitabile & Javier Botero Álvarez & Francisco Haimovich Paz & Sergio Urzúa, 2017. "At a Crossroads," World Bank Publications - Books, The World Bank Group, number 26489.
    27. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January.
    28. James J. Heckman & Alan B. Krueger, 2005. "Inequality in America: What Role for Human Capital Policies?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582600 edited by Benjamin M. Friedman.
    29. Peet, Evan D. & Fink, Günther & Fawzi, Wafaie, 2015. "Returns to education in developing countries: Evidence from the living standards and measurement study surveys," Economics of Education Review, Elsevier, vol. 49(C), pages 69-90.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James J. Heckman & John Eric Humphries & Sergio Urzua & Gregory Veramendi, 2010. "The effects of educational choices on labor market, health, and social outcomes," Working Papers 2011-002, Human Capital and Economic Opportunity Working Group.
    2. Heckman, James J. & Humphries, John Eric & Veramendi, Gregory, 2016. "Dynamic treatment effects," Journal of Econometrics, Elsevier, vol. 191(2), pages 276-292.
    3. Fabiola Saavedra & Mónica Ospina, 2014. "Decisions about Postsecondary Education, their returns in Colombia," Documentos de Trabajo CIEF 012542, Universidad EAFIT.
    4. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    5. Juanna Schrøter Joensen, 2010. "Timing and Incentives: Impacts of Student Aid on Academic Achievement," 2010 Meeting Papers 823, Society for Economic Dynamics.
    6. Manudeep Bhuller & Philipp Eisenhauer & Moritz Mendel, 2022. "Sequential Choices, Option Values, and the Returns to Education," Papers 2205.05444, arXiv.org.
    7. Heckman, James J. & Urzúa, Sergio, 2010. "Comparing IV with structural models: What simple IV can and cannot identify," Journal of Econometrics, Elsevier, vol. 156(1), pages 27-37, May.
    8. Belzil, Christian, 2007. "The return to schooling in structural dynamic models: a survey," European Economic Review, Elsevier, vol. 51(5), pages 1059-1105, July.
    9. Heckman, James J. & Humphries, John Eric & Veramendi, Gregory & Urzua, Sergio, 2014. "Education, Health and Wages," IZA Discussion Papers 8027, Institute of Labor Economics (IZA).
    10. Gianluca Violante & Giovanni Gallipoli & Costas Meghir, 2005. "Education Decisions, Equilibrium Policies and Wages Dispersion," 2005 Meeting Papers 522, Society for Economic Dynamics.
    11. Josh Kinsler & Ronni Pavan, 2015. "The Specificity of General Human Capital: Evidence from College Major Choice," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 933-972.
    12. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 4, pages 331-461, Elsevier.
    13. Binelli, Chiara & Menezes-Filho, Naercio, 2019. "Why Brazil fell behind in college education?," Economics of Education Review, Elsevier, vol. 72(C), pages 80-106.
    14. Biewen, Martin & (neé Tapalaga), Madalina Thiele, 2020. "Early tracking, academic vs. vocational training, and the value of ‘second-chance’ options," Labour Economics, Elsevier, vol. 66(C).
    15. Ge, Suqin, 2013. "Estimating the returns to schooling: Implications from a dynamic discrete choice model," Labour Economics, Elsevier, vol. 20(C), pages 92-105.
    16. Magali Beffy & Denis Fougère & Arnaud Maurel, 2012. "Choosing the Field of Study in Postsecondary Education: Do Expected Earnings Matter?," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 334-347, February.
    17. Daniel dos Santos, "undated". "The choice of major: effects on wages and an evaluatio of the no-switching majors rule," Working Papers 09_06, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
    18. Paul Dalziel, 2015. "Regional skill ecosystems to assist young people making education employment linkages in transition from school to work," Local Economy, London South Bank University, vol. 30(1), pages 53-66, February.
    19. Taber, Christopher R., 2000. "Semiparametric identification and heterogeneity in discrete choice dynamic programming models," Journal of Econometrics, Elsevier, vol. 96(2), pages 201-229, June.
    20. Avner Ahituv & Marta Tienda, 2004. "Employment, Motherhood, and School Continuation Decisions of Young White, Black, and Hispanic Women," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 115-158, January.

    More about this item

    Keywords

    Public Spending; Education; Incidence Analysis; Inequality;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tul:ceqwps:88. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/detulus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nora Lustig (email available below). General contact details of provider: https://edirc.repec.org/data/detulus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.