Family and government investments in education

Abstract

This paper examines a few selected aspects of the relationship between family and government investments in education, including (a) the growth of household and government investments on education over time; (b) the elasticity of household and government expenditures on education to total expenditures of the households and government respectively; and (c) interaction between family and government expenditures on education. Using available aggregate data on India, it is found that family expenditures on education are sizeable. Family and government investments in education are positively correlated, and they complement each other; they are also elastic to the size of the respective total budgets. However, as per cent of GNP they are not found to be significantly related, nor are they found to be elastic to total budgets. The results lend support to what has been argued earlier: while absolute levels of expenditure on education are related to economic indicators, the relative priority accorded to education is not. The present analysis suggests that this is true both with respect to family budgets and to government expenditures on education.