A contribution to the determinants of annual household education expenditure in Ghana

Abstract

This study uses household-level data from the sixth round of the Ghana Living Standards Survey 2013–2014, covering 16,772 household, and using the Tobit model, focuses on factors driving annual household expenditure on education in Ghana. The key combined results are that Ghanaian households spend an average of 52.1 percent of household expenditure on education on basic education and that household income is inversely proportional to annual household expenditure on education and the estimate is not statistically significant. Educated head of household, family size, basic, secondary, post-secondary, and tertiary studies expenditures are positively correlated with annual household expenditures on education and were all statistically significant in determining annual household expenditures on education, with a priori indications for these variables expected. The rural household expenditure, male-headed household and the age of the household head variables were negatively correlated with the annual household expenditure on education. From a pro-poor education policy perspective, the Ghanaian government should increase spending on basic education, taking into account its impact on economic growth and national development, in order to reduce high household spending, tax breaks for household with larger family sizes, and reduce inequality in access to education for rural residents.