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This paper examines the effects of total, mineral, natural gas, and oil rents on the public total, education, health, and infrastructure expenditures using the dynamic panel estimation methods and data for more than 100 countries for the 1980–2015 period. Our results indicate that total resource rents do not have a significant impact on the public total and infrastructure expenditures. However, they provide a robust evidence for the adverse effect of resource rents on the public education and health expenditures. Our results lend a substantial evidence for the conclusion that the notorious resource curse can be also explained by its adverse effect on the human capital accumulation. We then test whether the democracy level matters in investigating the effects of resource rents on the public expenditures. Interestingly, we find that total resource rents exert a negative impact on the education expenditures only in autocratic countries. These results clearly indicate that policy makers should take necessary steps to remove the adverse effects of resource rents on the public education and health expenditures to increase human capital formation.

This study explores the impact of International Monetary Fund (IMF)-linked conditionality on government education expenditures in the Middle East and North Africa (MENA) region. Understanding the impact of conditional lending by international financial institutions on education spending is important due to the pivotal role education plays in fostering social and economic development. We use country-level panel data encompassing a representative set of 10 MENA countries from 1990 to 2020 and employ a cross-national fixed effects regression model. Our findings suggest that IMF conditionality demonstrates a positive relationship with government education expenditures in the MENA region. The proposed explanation is that the application of IMF policy advice can have a catalytic effect on donor financing, including for education. This indicates that the Fund's financing arrangements in the region can free up fiscal space for social spending, which, in turn, signals a sort of departure of the IMF from the reputation that typically precedes it-its traditional bias for macroeconomic stability irrespective of social costs. We argue that our findings are instructive for policy, especially if one shares the idea that education is a necessary prerequisite for achieving Sustainable Development Goal (SDG) 4: guaranteeing inclusive and equitable quality education and promoting enduring learning opportunities for all.

PurposeCompared to other neighbouring South Asian countries, Sri Lanka performs well in terms of education outcomes. Education is provided by the government for free from primary school level to the first-degree University level, yet households’ private education expenses are steadily increasing over time. Thus, this paper analyses trends and determinants of household private education expenditures using the country-wide micro-data from 1990 to 2013.Design/methodology/approachUsing Household Income and Expenditure Survey (HIES) 1990/91, 2002 and 2012/13 data along with annual school census data, this paper examines the relationship between private education expenditure patterns and the observed changes of reported both demand-side and supply-side factors. In particular, the present paper analyses determinants of household private education expenditures within the two-part model econometric framework by taking into account location and time fixed-effects.FindingsThe results show that trend of spending privately for education is increasing over time with rising household income. Rural, Tamil and Islamic households and those headed by less-educated members are less likely to spend privately for education. The results also confirm that improved-supply-side factors can significantly lower the household burden arising from out-of-pocket education expenditure.Research limitations/implicationsUnavailability of panel data and missing data on several districts due to security concerns are limitations of the study.Social implicationsThe trend of increasing private education expenses has implications on equity concerns of education in Sri Lanka, and it can undermine the purpose of free public education policy.Originality/valueTo our knowledge, this is the first study for Sri Lanka that examines patterns and determinants of private education expenditures using nationwide data for last two decades. This paper applies novel econometric techniques to account for various issues in household survey data analysis.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-07-2019-0445

This paper analyzes drivers of rising per-pupil public education spending, including Baumol’s “cost disease” effect. Empirical analyses using a large dataset of advanced and developing economies show that the contribution of Baumol’s effect was much smaller than implied by theory. Rather, the increase in per-pupil spending reflects rising wage premiums paid for teachers in excess of market wages, especially in developing countries. The strong wage premium effect suggests that institutional characteristics that govern teachers’ wage-setting are key determinants of education expenditure.

The purpose of this paper is to find the relationship between public expenditure in the educational sector and the economic growth in Indonesia since the government decided to spend 20% of the state budget on education. We used time series data from 1988 to 2018 and the Cobb-Douglas production function as an economic theory for measurement. In the methodology, we employed Autoregressive Distributed Lag bound tests to find the relationship between variables. The results show that public expenditure on education has an insignificant relationship in the long- and short-term estimation. However, they both have different directions, which is a positive relationship in long-term and a negative relationship in short-term estimation. Meanwhile, gross fixed capital formation shows a positive relationship, and the labour variable has a negative relationship in the short and long terms. In conclusion, the Indonesian government should manage the education system regarding the relationship between education expenditure and economic growth.

Cameroon was partitioned between France and the United Kingdom after WWI and then reunited after independence. I use this natural experiment to investigate colonial legacies in education, using a border discontinuity analysis of historical census microdata from 1976. I find that men born in the decades following partition had, all else equal, one more year of schooling if they were born in the British part. This positive British effect disappeared after 1950, as the French increased education expenditure, and because of favoritism in school supply towards the Francophone side after reunification. Using 2005 census microdata, I find that the British advantage resurfaced more recently: Cameroonians born after 1970 are more likely to finish high school, attend a university, and have a high-skilled occupation if they were born in the former British part. I explain this result by the legacy of high grade repetition rates in the French-speaking education system and their detrimental effect on dropout.

The study examines potential channels of socio-economic inequalities in education expenditure by Indian households at three different levels of education using National Sample Survey Data (2018). Based on Heckman’s two-step model estimates, the inequalities are evident in the participation choice and education expenditure by social groups, place of residence and religious minorities for education up to the secondary level. Nevertheless, the economic status of the household is less critical. Gender inequality is more evident in the expenditure incurred than the enrollment choice at the secondary level. For education at higher secondary and above levels, the crucial channel of social inequality lies in choosing a subject specialization and subsequent expenditures. As per multinomial logit estimates, the choice of streams is highly selective, favoring those with the capacity and willingness to pay. The selection corrected expenditure based on Lee correction reveals the extent of socio-economic inequalities in education expenditures at these levels of education. The apparent disparity in participation choice and expenditure can only be addressed through calibrated policy interventions, especially at higher levels of education. Failing to resolve this may exacerbate inequalities in education and labor market participation.

Rising income inequality has become a defining global challenge that hinders the achievement of the United Nations Sustainable Development Goals. The paper investigates the effect of fiscal policy and institutional capacity on income inequality among developed and developing countries. Applying the system Generalized Method of Moments (GMM) to control potential endogeneity for countries from 2000 to 2019, the following results have been established. The dynamic effect captured by the first lag of inequality suggests that the widening income gap is persistent in both developed and developing countries. We also find evidence that income tax is more progressive and may abate income inequality in developing countries and not in developed countries. However, taxes on goods and services were found not to impact income equalization globally. Furthermore, the findings reveal that government size, education expenditure, and health expenditure are negatively associated with income inequality in developed countries only. Public debt was observed not to influence income distribution across the world. We observed that corruption and government effectiveness do not significantly impact income distribution in developed and developing countries for institutional capacity. However, in most cases, the coefficients of the interactions between fiscal policy and institutional capacity bear the expected signs, albeit insignificant. Some policy recommendations have been offered.

I document a strong negative cross-country correlation between intergenerational earnings persistence and measures of tax progressivity and level, and between intergenerational earnings persistence and public expenditure on tertiary education. To explain these correlations, I then develop an intergenerational life-cycle model of human capital accumulation and earnings that features progressive taxation, public education expenditure, and borrowing constraints among the determinants of earnings persistence. I calibrate the model to U.S. data and use it to decompose the contributions to earnings persistence from different model elements and to quantify how earnings persistence in the United States changes as I introduce tax and education expenditure policies from other countries. I find that individual investments in human capital account for 73% of the estimated intergenerational earnings persistence in the United States. Taxation, through its impact on investments in human capital, can explain 50% of the variation between the United States and 10 other countries, whereas borrowing constraints, which have received much attention in the literature, have a limited impact on earnings persistence.

The new member states (NMS) of the European Union must comply with the Stability and Growth Pact (SGP) and the investment goals implied by the Lisbon Agenda. However, the SGP rules may result in underinvestment or distortions in the allocation of public expenditure. This paper provides new evidence on the effects of debt sustainability and the SGP fiscal constraints on government expenditure on fixed capital, education and health in OECD countries by estimating government expenditure reaction functions to public debt and cyclical conditions. We find that, at high levels of debt, government capital expenditure and education expenditure are significantly reduced as the debt ratio increases in all OECD countries independently of EMU (or EU) membership. By contrast, neither capital expenditure nor education expenditure is affected by the debt ratio in low-debt countries. These findings are robust to the inclusion of the government deficit in the estimated reaction functions. Hence, it appears that EU countries have been constrained in their investment decisions more by the need to ensure debt sustainability than by the rules of the SGP. In low-debt NMS countries, public investment even increases with the debt ratio, a finding that is reassuring for their growth prospects. However, a less optimistic picture emerges when we focus on expenditures on public health and education, as it appears that NMS governments cut such expenditures – even at low levels of debt – as the deficit increases. Problems in controlling total expenditure together with the preventive arm of the SGP may have penalised investment in human capital in the NMS while leaving fixed capital investment unaffected.