Redistribution Through Education: The Value of Public Education Spending

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.