TY - JOUR
T1 - Distributional effects of educational improvements
T2 - Are we using the wrong model?
AU - Bourguignon, François
AU - Rogers, F. Halsey
N1 - Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2007/12
Y1 - 2007/12
N2 - Measuring the incidence of public spending in education requires an intergenerational framework distinguishing between what current and future generations-that is, parents and children-give and receive. In standard distributional incidence analysis, households are assumed to receive a benefit equal to what is spent on their children enrolled in the public schooling system and, implicitly, to pay a fee proportional to their income. We show that, in an intergenerational framework, this is equivalent to assuming perfectly altruistic individuals, in the sense of the dynastic model, and perfect capital markets. But in practice, credit markets are imperfect and poor households cannot borrow against the future income of their children. We show that under such circumstances, standard distributional incidence analysis may greatly over-estimate the progressivity of public spending in education: educational improvements that are progressive in the long-run steady state may actually be regressive for the current generation of poor adults. This is especially true where service delivery in education is highly inefficient-as it is in poor districts of many developing countries-so that the educational benefits received are relatively low in comparison with the cost of public spending. Our results have implications for both policy measures and analytical approaches.
AB - Measuring the incidence of public spending in education requires an intergenerational framework distinguishing between what current and future generations-that is, parents and children-give and receive. In standard distributional incidence analysis, households are assumed to receive a benefit equal to what is spent on their children enrolled in the public schooling system and, implicitly, to pay a fee proportional to their income. We show that, in an intergenerational framework, this is equivalent to assuming perfectly altruistic individuals, in the sense of the dynastic model, and perfect capital markets. But in practice, credit markets are imperfect and poor households cannot borrow against the future income of their children. We show that under such circumstances, standard distributional incidence analysis may greatly over-estimate the progressivity of public spending in education: educational improvements that are progressive in the long-run steady state may actually be regressive for the current generation of poor adults. This is especially true where service delivery in education is highly inefficient-as it is in poor districts of many developing countries-so that the educational benefits received are relatively low in comparison with the cost of public spending. Our results have implications for both policy measures and analytical approaches.
KW - Economic development
KW - Economic impact
KW - Educational finance
KW - Expenditures
KW - Human capital
KW - Incidence of public spending
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U2 - 10.1016/j.econedurev.2007.10.001
DO - 10.1016/j.econedurev.2007.10.001
M3 - Article
AN - SCOPUS:36549078562
VL - 26
SP - 735
EP - 746
JO - Economics of Education Review
JF - Economics of Education Review
SN - 0272-7757
IS - 6
ER -