Education Spending Research Articles

The Mediating Effect of Fiscal Space on the Relationship between Educational Expenditure and Economic Growth

Existing literature is inconclusive about the relationship between educational spending and economic growth as it assumes, implicitly, that this relationship is direct. An alternative perspective, that has received less attention in the literature, is that this relationship can be mediated by mediating variables such as fiscal space. The study evaluated whether the fiscal space has a mediating effect on the relationship between economic growth and educational spending. The results have shown that educational spending affects the moderator variable significantly meaning educational expenditure has no direct effect on economic growth but through the moderating factor, fiscal space. This means that there is an indirect effect of educational expenditure on economic growth. In Zimbabwe, educational spending is the major expenditure by the government hence its financing depends on the government’s ability to raise revenue to fund it. An increase in fiscal space has the effect of enhancing economic growth.

Public Spending and Inclusive Growth in Developing Asia

This paper examines the impact of government spending on inclusive growth in developing Asia, focusing on fiscal redistribution through education, health, and social benefits. Using panel data from 16 countries over the period 1970–2017, we apply a fixed-effects logistic regression model to assess the likelihood of inclusive growth episodes. Our findings indicate that fiscal redistribution, particularly through targeted health and education spending, significantly enhances the chances of achieving inclusive growth. The results also suggest that redistributive spending helps reduce income inequality, ensuring that the benefits of economic growth are more widely shared. We further explore the practical implications of these findings through case studies of China, India, and Vietnam, demonstrating how effective government spending can foster inclusive growth. The paper highlights the importance of well-targeted fiscal policies to support sustainable and equitable development in the post-COVID recovery.

IMPACT OF SOCIAL POLICY ON CPI IN MALAYSIA BETWEEN 2005-2023

The social policy that the government in Malaysia implemented had positive influences on the local community and economy in Malaysia as well, which focused on the Consumer Price Index (CPI) and the idea that the trend would change if social policy were made. A study focused on the effect of social policy specified in Malaysia’s education, health, and housing areas on CPI. This study used the quantitative method based on the model of ordinary least squares (OLS), and CPI (Y) was the dependent variable, while government education spending (X1), government health spending (X2), and government housing spending (X3) were the independent variables. According to the results of this research, it seems that there was a positive impact of social policy on the CPI, but no significant social policy that the Malaysian government implemented had a determined power over the CPI. Most country research on the impact of social policy on CPI was also insignificant, based on the previous studies. These findings found that CPI was affected by other factors apart from social policy as well and need to be studied as potential factors in the future, as there was a slight significance. To emphasize this study, ARMA is the best-suggested way to analyse the trend of CPI in Malaysia.

The fall and rise of parental financial investments during the COVID‐19 pandemic

AbstractObjectiveThis research note investigates changes in American parents' financial investments in children during the COVID‐19 pandemic, as well as whether and how changes in parents' spending varied based on parental education.BackgroundParents purchase goods, experiences, and services that shape children's human capital and life chances. Socioeconomic differences in parental expenditures on children represent an important pathway for perpetuating inequality across generations. The COVID‐19 pandemic disrupted children's lives in ways that may have changed these levels of investment.MethodThe 2015–2022 Consumer Expenditure Survey (CEX) is used to describe spending on five key categories of investments in children's human capital (educational spending, extracurricular activities and lessons, computers and tablets, formal childcare, informal childcare) overall and by parental education. Mediation analysis assesses the extent school closures explain these changes.ResultsChildcare and extracurricular expenditures initially decreased significantly and then gradually recovered to pre‐pandemic levels by the end of 2021. Cutbacks were primarily among more educated families. However, spending on schooling increased in 2021 and computer and tablet purchases spiked in 2020, particularly among more educated families. Mediation analysis suggests that when expenditures were most affected by the pandemic (in 2020), school closures explained 50%–70% of those changes.ConclusionThis note provides evidence that during the pandemic socioeconomic inequalities in child‐related spending decreased in some categories of spending (e.g., childcare and extracurriculars) and increased in others (e.g., computers and tablets). Many changes appeared short‐term, but changes in education point to possible longer‐term shifts in parents' preferences about children's educational environments.

Does War Make States? Military Spending and the Italian State‐Building, 1861–1945

ABSTRACTWe present empirical evidence on the relationship between military spending and the expansion of other government budget items and tax revenues from the unification of Italy (1861) up to the end of World War II. Until 1922, investments in education and social transfers to families mainly moved in step with defence spending. This means that increases in defence spending imply an increase in both education spending and transfers. Moreover, transfers also play a compensatory role during recessions. Increases in defence spending do not crowd out investment in capital expenditure, while disinvestment in defence is associated with an increase in investment in capital. The pro‐cyclical behaviour of tax revenues is compatible with the debt‐financing dynamic of much government expenditure. Although our analytical narrative is not universally valid, it does support the persistent centrality of external wars in the discontinuous growth and expansion of central government in the Italian state, with some exceptions explained by historical events.

The response of public education spending to changes in student cohort sizes

ABSTRACT In this paper, we study the elasticity of educational spending with respect to changing student numbers, in a system where educational spending is autonomously determined at a regional level. While many studies focus on the potential effect of an ageing society on educational spending, only a few explicitly analyse the direct effect of changing cohort sizes. We find that education expenditures respond rather loosely to changing student numbers and that the elasticity strongly depends on regional and institutional settings. In rural areas, for instance, educational spending tends to be completely inelastic, which raises questions regarding both, efficiency and equity concerns.

What Determines Public Funding for Elementary Education in India? Evidence From Before and After a Policy Change

ABSTRACTKeeping to the increased emphasis on better educational quality across India as a tool of nation‐ building strategy, this study attempts to integrate demand components in analyzing the determinants of public spending for elementary education across states in India from 2005 to 2016. The study finds that the income (per capita) elasticity of per student government expenditure is higher in post‐reform period. The state government's share of income devoted to elementary education remains roughly constant. Applying a correlated random effect approach to linear balanced panel data, this paper concludes that over time, a major determinant of growth of per student government expenditure is the growth of income per capita. Household demand for education, which is positively correlated with states' levels of development, influences public funding for education across states. The results will be important for analyzing general equilibrium models where the government aims to fulfill household demand.

Role of public schools in education decisions in rural India

AbstractEducation is a fundamental pillar of human development, and India's Right to Education Act 2009 established it as a basic right for children aged 5–14. Despite this, many children in rural India still struggle to access basic schooling, which affects their ability to continue their education. In this paper, we explore factors influencing school participation and continuation of children aged 5–16 years in rural India, with a specific focus on the role of having an appropriate public school within the village after the Act's implementation. An ‘appropriate school’ is defined based on the last class a child attended. Using data from the nationally representative Annual Survey of Education Report (ASER), our analysis employs a pooled cross‐section logistical model. The findings reveal that the presence of an appropriate public school in the village significantly increases the likelihood of a child attending school. This effect is particularly pronounced for girls, highlighting the importance of accessible schooling in fulfilling the Right to Education Act's objectives.The results underscore the need for policy makers to ensure the availability of appropriate public schools at all educational levels within villages, as this is crucial for enhancing school attendance and reducing dropout rates, especially among girls. Context and implications Rationale of the study: To understand how inadequate and unequal access to school infrastructure, especially the absence of government schools, explains a significant proportion of children in India not completing their schooling. Why the new findings matter: The findings strongly underscore the importance of ensuring access to a school within the village, particularly for girls. Implications: There is a need to view school education as one composite goal to enhance participation and reduce dropout rates across all levels, aligning with the Samagra Shiksha scheme's principles of equitable access to all levels of education and inclusion of disadvantaged groups. Achieving these goals requires investment in existing school infrastructure to support expansion and resource provision for higher levels of schooling. With educational spending at approximately 3% of GDP between 2010 and 2020, much lower than the 6% recommended by the National Education Policy 2020, addressing this gap presents an opportunity to improve educational outcomes nationwide.

A postcode lottery in education? Explaining regional inequality in multilevel systems

AbstractInequality is a challenge for societies around the globe. In addition to its socio‐economic and political dimensions, inequality also has a territorial dimension. Focusing on educational inequality across regions, this article explores factors that shape regional differences in student enrolment and educational attainment in 14 OECD countries. The findings of the article suggest that a strong level of regional authority over education increases regional inequality in education. Further factors are regional differences in education expenditures and variation in the population size of regions. Low regional inequality in education seems to be explained by a low degree of regional authority or low differences in education spending. By examining regional inequality in education, the article enhances our understanding of the way multilevel governance influences the quality of life within regions. In particular, it highlights the impact of decentralization on territorial inequality.

Income inequality: The effects of public education expenditure and information and communications technology in sub-Saharan Africa

Background: As nations globally strive to meet the United Nations Sustainable Development Goal (SDG) 10, which underscores the reduction of inequality, there is an increasing need to harness the power of education and information and communications technology (ICT) to achieve this aim. Therefore, this study is motivated by this rationale.Aim: The synergistic effect of government spending on education and ICT on income inequality in sub-Saharan Africa (SSA) in the long run.Setting: Panel data for 30 SSA countries from 1990 to 2022 are used.Method: This research used the Fully Modified Ordinary Least Square (FMOLS) technique, which provides long-run estimates, to achieve the aim of the article.Results: The FMOLS results reveal that public education expenditure increases income inequality while its squared expenditure reduces it in the long run. However, over time, ICT diminishes inequality. Notably, the combined effect of public education spending and ICT strengthens the effect of public education expenditure on income inequality in SSA in the long term.Conclusion: In summary, with the incorporation of additional control variables in the analyses, it suggests that SSA’s governments, along with policymakers, have the opportunity to achieve income inequality reduction by strategically making use of public education spending and ICT.Contribution: This article adds significant value to the literature by demonstrating the effect of public education spending and ICT on income inequality in SSA (characterised by higher level of income inequality). To mitigate concerns regarding endogeneity, this article uses FMOLS.

Local Government Spending: Policing Versus Social Services

US cities have recently increased the share of their budgets devoted to policing and decreased the share devoted to social services. However, a growing body of research demonstrates that social services can durably reduce crime, raising the question of whether spending more on police and less on social services reduces crime in the short term only to increase it in the long term. This review addresses this question by first recounting recent trends in municipal budgeting. Then, it summarizes the causal evidence for which local government functions best reduce crime, focusing on policing, education, employment, and housing. Research suggests that education spending efficiently and durably reduces crime with fewer negative externalities than policing but with longer delays. Evidence that housing and employment spending suppresses crime is promising but nascent. Finally, the review recommends turning renewed scholarly attention to government budgets and the root causes of crime trends.

The side effects of a big push growth strategy: export incentives and primary education under military rule in Brazil, 1967–1985

Abstract During the military regime in Brazil (1964–1985), enrollment ratios in primary education grew substantially in the first decade under dictatorship, but stagnated in the mid-1970s. This paper shows that education spending might depend on the levels of centralisation in tax matters. Using panel data regressions and qualitative evidence, we argue that a massive big push industrialisation programme increased the pressure on external accounts, leading the government to intensify an export incentive policy based on tax subsidies that decreased the income of subnational governments. As a result, the capacity of funding mass education was compromised in the second half of the 1970s.

ANALISIS PENGARUH BELANJA PEMERINTAH, IPM, DAN INVESTASI DALAM NEGERI TERHADAP PERTUMBUHAN EKONOMI PROVINSI PAPUA

Economic growth is a benchmark for analysis of a region's development. So it is necessary to pay attention to the determinants of economic growth. Papua is a case study in this analysis because the level of economic growth is in the high category, in addition to the human development index remaining low in the last ten years. This research aims to analyze the influence of government spending according to function, human development index and investment on economic growth in Papua Province in 2011-2019. The type of data used is panel data from 29 districts/cities for eight years using the panel data regression analysis method. The results of this research show that government spending has different results for each type of government function spending. It was found that education spending and economic spending had no influence on economic growth, but the opposite was true for health spending. Apart from that, the human development and investment index explained through PMTB also has an influence on economic growth. These findings could have implications for the government in deciding policies for allocating government spending, especially for education and economic spending functions, which are still not efficient in stimulating economic growth in the Papua region.

HUMAN CAPITAL AND ECONOMIC GROWTH IN FUJIAN PROVINCE-CHINA

Human capital is a key factor in driving economic growth at both the national and provincial levels. This study aimed to evaluate how human capital influences economic growth in Fujian by examining data from 2008 to 2020. Numerous theoretical and empirical studies have confirmed approaches to measuring human capital through formal education, cost-based approaches, and income-based approaches. Based on these approaches, the research objective, and data availability, two variables were selected: trained labor and state budget expenditure on education. To examine the impact of human capital on economic growth, the study employs a multivariate OLS regression method with the following tests: Normal Distribution of Residuals, Heteroscedasticity, Autocorrelation, Multicollinearity. The analysis used trained labor and educational budget expenditure as indicators of human capital. The findings indicated that both trained labor and educational spending had a significant positive impact on Fujian's GRDP. While trained workers contributed to increasing the province's economic output, the current level of spending on education and training was not substantial enough to generate a strong effect on the economy. Therefore, Fujian should focus on developing a strategy to cultivate high-quality human capital and enhance the effectiveness of its investment in education and training in the coming years. As the province continues to modernize and integrate into the global economy, its ability to develop and retain a skilled workforce will be a key determinant of its success. The province's policy makers must adopt solutions that encourage workers to invest in improving their skills and productivity, while also fostering a learning culture. In the context of climate change and limited local resources, Fujian’s reliance on human capital will be critical in achieving its goal of becoming a leading province in the China and, eventually, a highly developed region in China by 2030.

Evaluating the Role of Institutional Quality in the Relationship Between Education Expenditure and Manufacturing Growth: Insights from Quantile Regression Models

This study aims to provide empirical insight into the role of institutional quality and its impact on the relationship between expenditure on education and the growth of manufacturing in Malaysia. The study employed time series data from 1984 to 2020, using a quantile regression model for three quantiles: 25%, 50%, and 75%. The results showed that government spending on education (GXE) had a negative and statistically significant effect on manufacturing sector growth (MSG) on all quantiles in both interaction and non-interaction models. This may indicate a lack of quality, allocation, and efficiency in government expenditure and its targeting. However, the interaction effect between government spending on education and institutional quality (INTC GXE&IQI) on manufacturing sector growth (MSG) provided a consistently positive effect across all quantiles. This positive interaction means that the effect of education spending on manufacturing sector growth is conditional on the quality of institutions. The positive coefficients indicate that when government spending aligns with robust institutional frameworks, it effectively stimulates growth within the manufacturing sector. This phenomenon may be attributed to effective institutions amplifying the impact of government expenditure by ensuring efficient fund utilization for intended purposes. Policies aimed at strengthening institutions' quality —such as improving bureaucracy, enhancing transparency, and combating corruption—can enhance the efficacy of education expenditure, which supports the long-term and sustainable growth of the manufacturing sector.

Educational spaces: The relation between school infrastructure and learning outcomes

This article examines the relationship between school infrastructure and academic performance in Ecuador. The objective of this research is to identify which types of infrastructure are associated with better student outcomes in elementary schools. The study employs data from the 2019 UNESCO standardized test, ERCE-2019, for Ecuadorian primary schools. The findings indicate a significant positive correlation between various types of school infrastructure and student achievement. Such infrastructure includes art and music installations, on-site nursing facilities, and basic service connections, especially in rural areas. Significant correlations between educational outcomes and large-scale infrastructure investments are either not observed or are inconsistently evidenced. These results challenge the heavy focus on prominent educational infrastructure projects in Ecuador, suggesting an opportunity to reorient educational spending to enhance outcomes cost-effectively. These research findings may apply not only to Ecuador but potentially to the broader Latin American context.

Teenage childbearing and the welfare state

Abstract Teenage childbearing is a common incident in developed countries. However, teenage births are much more likely in the USA than in any other industrialized country. Most of these births are delivered by female teenagers from low-income families. The hypothesis put forward here is that the welfare state (a set of redistributive institutions) has a significant influence on teenage childbearing behavior. We develop an economic theory of parental investments and the risky sexual behavior of teenagers. The model is estimated to fit stylized facts about income inequality, intergenerational mobility, and the sexual behavior of teenagers in the USA. The welfare state institutions are introduced via tax and public education expenditure functions derived from US data. In a quantitative experiment, we impose Norwegian taxes and education spending in the economic environment. The Norwegian welfare state institutions go a long way in explaining the differences in teenage birth rates between the USA and Norway.

Inequality in the Classroom: Electoral Incentives and the Distribution of Local Education Spending

Inequality in the Classroom: Electoral Incentives and the Distribution of Local Education Spending

The Government Expenditure of Education in Ethiopia: Impact and Prospects Ahead

Ethiopia is not an exception to the rule that government spending on education has a significant influence on a nation's economic progress. The impact of government investment on education on Ethiopia's economic growth is examined in this article. Ethiopia has significantly expanded its educational spending in the last ten years with the goal of raising literacy rates, boosting school enrollment, and advancing the development of human capital overall. Positive results like increased enrollment rates and improved educational access have been a result of this investment, and these are crucial for developing a competent labor force and promoting economic growth. However, a number educational issues, such as poor infrastructure, subpar teachers, and regional differences in resource distribution, affect how beneficial this investment will be. It is observed that government expenditure on education in Ethiopia is significant, there are still areas that require attention in order to maximize its impact on the country's economy. By addressing these challenges and continuing to invest in education, Ethiopia can further enhance its economic potential and promote sustainable development for the future.

Impacto del gasto público en educación sobre el crecimiento económico en la región macro sur del Perú durante el periodo 2003-2021

The present research work aims to determine the impact of public spending on education on economic growth in the southern macro region of Peru during the period 2003 to 2021, covering the regions of Puno, Tacna, Arequipa, Moquegua, Apurímac, Cusco and Madre de Dios. The data used come from the statistical area of the Ministry of Economy and Finance, the National Institute of Statistics and Informatics and the Educational Quality Statistics of the Ministry of Education. The methodological approach adopted is hypothetical-deductive, non-experimental with a panel-type design; the estimation of the model was carried out using the Generalized Least Squares Feasible panel data technique which reveals significant quantitative relationships between the analysis variables. In general terms, the main findings indicate that a 1 % increase in public educational spending correlates with a 0.12 % increase in economic growth. Furthermore, when breaking down the impact of public spending by different levels of initial education - primary, secondary and higher - a 1 % increase generates an increase of 0.13 %, 0.14 % and 0.069 % respectively on economic growth. Furthermore, it is highlighted that investment in physical capital has a positive effect on economic growth. In conclusion, total public spending on education and spending by educational levels exhibit a positive and significant impact on economic growth, highlighting the strategic importance of government investment in education as a fundamental catalyst for economic growth.