Public Education Spending and Income Inequality in Bangladesh

Abstract

The aim of the article is to analyse the effects of public education and education spending of education on income distribution in Bangladesh. It follows the benefit incidence analysis (BIA) method using secondary data of 2010. As a result of public education spending, inequality decreases in Bangladesh. However, the rich people seem to be benefited more from each level of education particularly the high income group receives about 50% benefit from the public spending. Although the target of Bangladesh government is to reduce poverty and providing benefits to the poor, they are not ultimate beneficiaries. It demands to redesign the policy to set up more educational institutions in rural areas, special programmes like scholarship systems, loan system should be opened up for the poor income groups. from the government spending. BIA is a process of computing the distribution of public expenditure across different demographic groups, such as women and men. The procedure involves allocating per unit public subsidies (for example, expenditure per student for the education sector) according to individual utilization rates of public services(7)-(9). It is a tool used to assess how tax policy or government subsidy affects the distribution of welfare in the population. In other words, it evaluates the distribution of government subsidies among different groups in the population, in particular, most of benefit incidence analyses divide the population into sub-groups (e.g. quintiles or deciles) based on household per capita income. Since expenditures on education are expected to have a redistributive impact, BIA is centred on assessing whether public spending is progressive, that is, whether it improves the distribution of welfare, household income or expenditure. It estimates how much the income of a household would have to be raised if the household would fully pay for the subsidized public services (4), (7), (10). This research has an attempt to analyse the effects of public education in terms of accessibility and education spending of education on income distribution which will examine the pre-expenditure and post-expenditure income distribution. In order to present and compare the result the analysis will be done based on income share of households and calculated Gini coefficient of Bangladesh before the government expenditure on education. The Second stage will be the detailed calculation of public expenditure on primary, secondary, tertiary education services. In the third stage it will be the calculation of household income distribution to what extend inequality increases or decreases after the public education spending.