Composition of Government Expenditures and Demand for Education in Developing Countries

May 1, 2002

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John J Matovu, and Era Dabla-Norris. Composition of Government Expenditures and Demand for Education in Developing Countries, (USA: International Monetary Fund, 2002) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper addresses the potential effects on human capital accumulation and economic growth of the alternative compositions of public expenditures in the context of a computable dynamic general equilibrium model of overlapping generations and heterogeneous agents in which altruistic parents make schooling decisions for their children. In the presence of fixed and variable costs for different levels of schooling, we show that reducing household costs of primary education has the largest positive impact on growth and poverty reduction in the short run. Moreover, an increase in higher education spending increases long-run growth. These effects can be substantial even when increasing education spending comes at the expense of public infrastructure investment.

Subject: Education, Education spending, Expenditure, Human capital, Income, Labor, National accounts

Keywords: Asset accumulation decision, Capital accumulation, East Asia, Education, Education spending, Government expenditures, Growth, Human capital, Income, Low income, Middle East, North Africa, Output ratio, Physical capital, Production fiinction, Production function, South Asia, Sub-Saharan Africa, WP

Publication Details

Pages:

47
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/078
Stock No:

WPIEA0782002
ISBN:

9781451850116
ISSN:

1018-5941

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