Equity in Educational Expenditures: Can Government Subsidies Help?
39 Pages Posted: 20 Apr 2016
Date Written: March 18, 2004
When there are externalities across households, governments can improve economic outcomes by equitably subsidizing education. But this chain of causality works only if (1) allocated resources reach the final recipients, and (2) equity in public subsidies translates directly into equity in total educational expenditures, including private spending at the household level. Using a unique data set from Zambia, Das shows that whether these conditions are met depends on the specific schemes used to allocate resources as well as the exact form of the subsidies. First, subsidies allocated through clear guidelines and legislated rules reached the final recipients, but those allocated at the discretion of province and educational offices did not. Second, even those components of subsidies that were progressive (in that the share of total subsidies for the poor was greater than the share for the non-poor) had no effect on inequality in total educational expenditures due to the crowding-out of household spending.
This paper - a product of Public Services, Development Research Group - is part of a larger effort in the group to understand the role of governments in improving the delivery of basic services.
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