Public Education Spending and Poverty in Burkina Faso: A Computable General Equilibrium Approach

Abstract

A multisectoral computable general equilibrium model is constructed to evaluate the direct and indirect effects of public education policy on well-being, poverty and income distribution in Burkina Faso. It specifies a flexible endowment of qualified and unqualified workers in each household. The education system is divided in two: primary education and higher education. The volume of higher education is exogenous while primary education is demanded by households as an investment to “transform” unqualified workers into qualified workers. The simulations indicate that a 40% across-the-board increase in public subsidies for primary education, financed by an increase in taxes on household income and sales taxes, not only leads to an increase in welfare but also to a decline in the incidence of poverty for all household types.

Keywords: CGE model, public education spending, Burkina Faso

JEL Classification: C68, H52, I21, I32, J24, O55