Domestic Government Spending on Human Capital: A Cross-Country Analysis of Recent Trends

Abstract

Using a new data set comprised of publicly available information, this paper provides cross-country evidence on domestic government spending for human capital in recent years. Creating a measure of social spending that covers the three sectors of health, education, and social protection has proven to be a challenging task. Only for health spending is there high data coverage over time and across countries. Education and, especially, social protection display large gaps. Increases in social sector spending have generally been slow and unsteady. Although education spending in low-income countries has seen a stable and steady increase, spending on health has been remarkably flat. Human capital outcomes are only weakly correlated with spending in the three sectors. Finally, this paper discusses future research required to provide guidance on how much and what type of investment is needed to achieve high levels of human capital.