Distributional Effects of Educational Improvements : Are We Using the Wrong Model?

Measuring the incidence of public spending in education requires an intergenerational framework distinguishing between what current and future generations - that is, parents and children - give and receive. In standard distributional incidence anal...

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Bibliographic Details
Main Authors:	Bourguignon, François, Rogers, F. Halsey
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ABSENTEEISM ACCOUNTABILITY ACCOUNTABILITY FOR RESULTS ACCOUNTING ADVERSE IMPACT ADVERSE SELECTION ALLOCATION BANK POLICY BENEFIT INCIDENCE ANALYSIS BEQUEST BEQUESTS BORROWING BUDGET CONSTRAINT CALCULATIONS CAPITAL MARKET CAPITAL MARKETS CAPITAL-MARKET CASH TRANSFER CASH TRANSFERS CENTRAL GOVERNMENT CHANGE IN WELFARE CONSUMPTION EXPENDITURES CREDIT MARKETS CURRENT INCOME DEVELOPING COUNTRIES DISCOUNT RATE DISTRIBUTION OF INCOME DISTRIBUTIONAL EFFECTS EARNINGS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC RESEARCH ECONOMICS OF EDUCATION EDUCATION EXPENDITURES EDUCATION POLICY EDUCATION PROGRAM EDUCATION REFORM EDUCATION SPENDING EDUCATION SYSTEM EDUCATION SYSTEMS EDUCATIONAL BENEFITS EFFICIENCY IMPROVEMENTS ELASTICITIES ELASTICITY ELASTICITY OF SUBSTITUTION ENROLLMENT EQUALITY EQUALITY OF OPPORTUNITIES EQUALITY OF OPPORTUNITY FAMILIES FINANCES FUTURE EARNINGS FUTURE INCOME FUTURE INCOMES GOVERNMENT EXPENDITURES HEALTH CARE HEALTH CENTERS HEALTH SERVICES HOUSEHOLD EXPENDITURES HOUSEHOLD INCOME HOUSEHOLDS HUMAN CAPITAL HUMAN DEVELOPMENT INCIDENCE OF PUBLIC SPENDING INCIDENCE STUDIES INCOME INCOME DISTRIBUTION INCOME TAX INCREASE IN INCOMES INEQUALITY INFRASTRUCTURE INVESTMENTS INTEREST RATE INTERNATIONAL BANK INVESTING KNOWN STUDY LIFETIME LUMP-SUM TAX LUMP-SUM TRANSFER MARGINAL COSTS MEDICAL CARE MORAL HAZARD NUTRITION PENSION PENSION SYSTEM PERFECT COMPETITION PERSONAL INCOME PHYSICAL CAPITAL POLITICAL ECONOMY POST-TAX INCOME PRODUCTION FUNCTIONS PRODUCTIVITY PROGRAMS PROGRESSIVE TAXATION PUBLIC ECONOMICS PUBLIC EDUCATION PUBLIC EMPLOYMENT PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC FINANCE PUBLIC HEALTH PUBLIC INVESTMENTS PUBLIC SCHOOL PUBLIC SCHOOLS PUBLIC SERVICE PUBLIC SERVICE DELIVERY PUBLIC SERVICES PUBLIC SPENDING PURCHASING POWER QUALITY OF EDUCATION RATE OF INTEREST RATE OF RETURN REDISTRIBUTION OBJECTIVES REDISTRIBUTIVE EFFECTS RETURNS SALARIES SALARY SALES SAVINGS SCHOOL-AGE CHILDREN SECONDARY EDUCATION SECTOR BUDGET SOCIAL EXPENDITURES SOCIAL WELFARE SUB-SAHARAN AFRICA SUBSIDIZATION TAX BASE TAX INSTRUMENTS TAX PAYMENTS TAX POLICY TAX RATE TAX REVENUES TAX STRUCTURE TAX SYSTEM TAXATION TRANSACTION TRANSACTION COSTS TRANSFER PAYMENT TUITION UTILITY FUNCTION WAGE WAGES WEALTH ZERO ELASTICITY
Online Access:	http://documents.worldbank.org/curated/en/2007/12/8828759/distributional-effects-educational-improvements-using-wrong-model http://hdl.handle.net/10986/7613

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Summary:	Measuring the incidence of public spending in education requires an intergenerational framework distinguishing between what current and future generations - that is, parents and children - give and receive. In standard distributional incidence analysis, households are assumed to receive a benefit equal to what is spent on their children enrolled in the public schooling system and, implicitly, to pay a fee proportional to their income. This paper shows that, in an intergenerational framework, this is equivalent to assuming perfectly altruistic individuals, in the sense of the dynastic model, and perfect capital markets. But in practice, credit markets are imperfect and poor households cannot borrow against the future income of their children. The authors show that under such circumstances, standard distributional incidence analysis may greatly over-estimate the progressivity of public spending in education: educational improvements that are progressive in the long-run steady state may actually be regressive for the current generation of poor adults. This is especially true where service delivery in education is highly inefficient - as it is in poor districts of many developing countries - so that the educational benefits received are relatively low in comparison with the cost of public spending. The results have implications for both policy measures and analytical approaches.

Distributional Effects of Educational Improvements : Are We Using the Wrong Model?

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