What determines public education expenditures in Russia?1

Recent studies suggest that the allocation of expenditures in education is important for growth. The state of public education spending in many transition economies highlights the need for an assessment of the nature of education expenditures in these countries. This paper attempts to fill this gap in the literature by estimating the determinants of education expenditures in the Russian Federation. Results from panel data analysis show that revenue and the student‐population ratio have a positive impact on education expenditures while the effect of population density is negative. Three regional variables also show significant impact. The income and price elasticity of public education expenditures are estimated to be 0.57 and ?0.18, respectively, a result comparable to studies from other countries. The results presented here provide insight into how fiscal institutions and the structure of the political process in Russia may affect the degree of resource allocation in the educational sector during the transition process.     

Equality,complementarity and the incidence of public expenditures

The paper attempts to extend the Arrow utilitarian model on equity and efficiency of public expenditures in a number of ways. It is shown how one could, in principle, interpret an observed distribution of a public expenditure quantitatively in terms of the underlying interaction between the input and the individual attributes and the postulated normative policies applied. Examples are given of positive input interaction leading to regressive distributional outcomes, even if the underlying policy is egalitarian but not sufficiently so. Finally, the model is extended to the case of a progressive income tax and that of multiple government inputs.     

Corruption and public spending on education and health

Existing country and regional studies show that the effect of corruption on public spending on health and education is mixed. This letter reveals that the effect of corruption on health and education spending is significant and non-linear in a panel of 134 countries observed over two decades: For an overwhelming majority of countries, corruption has a positive effect on the share of public resources spent on public health and a negative effect in the case of education. The results presented are robust to several econometric challenges ignored in the literature.     

On the growth and welfare maximizing allocation of public investment

In this paper we present an endogenous growth model to analyze the growth maximizing allocation of public investment among N different types of public capital. Using this general model of public capital formation, we analyze the stability of the long-run equilibrium and we derive the growth-maximizing values of the shares of public investment allocated to the different types of public capital, as well as the growth-maximizing tax rate (amount of total public investment as a share of GDP). The empirical implication of the model is that both the effects of the shares of public investment and the tax rate on the long-run growth rate are non-linear, following an inverse U-shaped pattern. Our analysis is completed by showing that the growth-maximizing shares of public investment and the growth-maximizing tax rate also maximize welfare in the decentralized economy.     

Effect of public programs on family size,child education and health

"A bulk of public resources in developing countries is devoted to the subvention of population control and health investments. The effects of these programs have been evaluated in this study with household and community data from Bangladesh. The results suggest that subsidy on family planning and secondary school would be most effective in the achievement of harmonious goals of reducing fertility and mortality and fostering investments in child education."     

Endogenous determination of public budget allocation across education stages

This paper studies the endogenous determination of public budget allocation across hierarchical education stages. In less developed economies, the top class has dominant political power to implement its most preferred policy, which is characterized by exclusive participation and large schooling expenditure at higher education at the expense of basic education. In developed economies, the budget allocation is more balanced; under certain parameters, it leads to expanded participation of the middle class in higher education. The model offers an explanation to the observed cross-country policy difference and is broadly consistent with historical evidence.     

Public financing of health expenditures,insurance, and health outcomes

The effects of public financing of health expenditures, insurance coverage and other factors on health outcomes are examined within health production models estimated using 1960–1992 data across 20 OECD countries. Mortality rates are found to depend on the mix of health care expenditures and the type of health insurance coverage. Increases in the publicly financed share of health expenditures are associated with increases in mortality rates. Increases in inpatient and ambulatory insurance coverage are associated with reduced mortality. The effects of GDP, health expenditures and age structure on mortality are similar to those in previous studies. Tobacco use, alcohol use, fat consumption, female labour force participation, and education levels are also significantly related to overall mortality rates. Increases in income inequality are associated with lower mortality rates, suggesting that the negative relationship between inequality and health outcomes suggested by some previous studies does not remain when a more complete model is estimated. The result that increases in public financing increase mortality rates is robust to a number of changes in specifications and samples. Thus, as countries increase the level of their health expenditures, they may want to avoid increasing the proportion of their expenditures that are publicly financed.     

A model of the optimal allocation of government expenditures

Government expenditures can be used for various socioeconomic objectives, including public education, consumption of public goods and services, and social protection. This paper analyzes the optimal allocation of public expenditures among these competing functions. We establish an overlapping generations model with heterogeneous individuals in which the government optimally chooses income tax, transfer payment, educational spending, and public consumption. Our model characterizes the transitional dynamics and the steady state of each function with and without a pay‐as‐you‐go intergenerational contract. We also conduct a simulation illustrating that the presence of an intergenerational contract may raise public consumption and social welfare in the steady state.     

Human capital accumulation and endogenous public expenditures

In this paper, we present an overlapping-generations model, where individuals accumulate human capital through formal schooling. We model the role of the public sector in schooling as one of collecting taxes from households and providing inputs to the learning technology. Public expenditures on schools are determined endogenously. Under plausible restrictions, our model's predictions qualitatively match the observations on schooling, public expenditures on education, and student-teacher ratios. JEL Classification: E13, E62.
Accumulation de capital humain et dépenses publiques endogènes. Dans ce mémoire, les auteurs présentent un modèle de générations qui se chevauchent où les individus accumulent du capital humain via l'éducation formelle. Le rôle du secteur public dans l'éducation est défini comme celui de collecteur d'impôts auprès des ménages et de fournisseur d'intrants dans la technologie d'apprentissage. Les dépenses publiques en éducation sont déterminées de manière endogène. A partir de restrictions plausibles, les prédictions du modèle s'arriment qualitativement aux observations sur le monde scolaire, aux dépenses publiques en éducation, et aux ratios élèves/enseignants.     

The golden rule of public finance and the composition of government expenditures: a growth and welfare analysis

This paper employs an endogenous growth model to study the growth and welfare effects of the golden rule of public finance. Two versions are compared, whereby government deficits are restricted for the use of public investments. It is shown that the growth effect of the golden rule depends on what kind of expenditure is adjusted to meet debt obligations. A transition from a balanced budget to a golden rule is performed to study welfare. The results indicate that a budget rule with detrimental growth effects can still have positive welfare implications, and vice versa, if the composition of government expenditures and transitional dynamics are taken into account.     

Public education expenditures and private school enrollment

In this paper, I investigate whether increases in public education expenditures lead to reductions in private school enrollment. In order to deal with the endogeneity of public expenditures, I use as a natural experiment the 1998 FUNDEF reform in Brazil that caused exogenous variations in local public school funding. Using data from Brazilian School and Population censuses, I show that public education expenditures increases are associated with reductions in the share of private school enrollment for grade 1. However, the effect is smaller for grades 2 to 4, which is consistent with the existence of costs associated with switching schools.     

Quality,quantity and total expenditures on publicly provided goods: the case of public mental hospitals

This paper proposes a positive model of public sector resource allocation for goods where quality, as well as quantity, is a salient dimension. The model views decisions about quality, quantity, and total expenditures as occuring within a ‘zone of contention’, bounded by minimum requirements for quality and quantity - reflecting technological, regulatory and legal constraints - and a maximum ceiling on total expenditures. The model is consistent with a number of alternative views of the political market place. It is formally derived from a Stone- Geary-type objective function. For purposes of estimation, the model can be transformed into a special case of the CALM model [Fischer and Kamlet (1984)]. The identification requirements for the CALM model are derived. The model is then applied to state expenditures on mental hospitals.     

The effects of public expenditures on labour productivity in Europe

Empirica - In this paper, we analyse the effects of public expenditures and their structure on productivity growth in industry and services in the European Union (EU) countries (1996–2017)....     

Relevance of corruption on the effect of public health expenditure and taxation on economic growth

We investigate whether corruption distorts the positive effect of public health expenditure and taxation on growth through panel data analysis of 75 developing countries for the period from 1995 to 2014. The findings indicate that, although both public health expenditure and taxation can increase economic growth, in countries with more corrupt governments this effect is reduced.     

Government response to increased demand for public services: The cyclicality of government health expenditures in the OECD

The more that health care expenditures are financed by general taxation, the greater the discretion governments are likely to exercise when timing increases in health care expenditures. Vote-maximising governments time increases in health care expenditures to occur in economic upturns, when voters are not as aware of the required increase in taxation. In recessions, they have an incentive to sustain expenditures on health care by diverting expenditures from other public expenditure programmes that voters perceive as low priority. In this way, government pursuit of a political agenda is likely to exert a systematic influence on the cyclicality of government expenditure. Predictions are tested with reference to the cyclicality of government health expenditures, for a sample of OECD countries from 2000 to 2012.     

Public expenditures on higher education and their impact on enrolment patterns

The purpose of this paper is to estimate the declines in enrolment that can be expected if government-provided scholarship aid is reduced and basic student charges are increased. A model of the scholarship aid process is interacted with a traditional human capital approach to enrolment behaviour. These models are then estimated using a large microdata set of young persons, and the fitted values utilized to simulate enrolment probabilities for white and nonwhite males and females given alternative fiscal scenarios.     

The allocation of consumer expenditures in a Swedish macroeconomic model

The paper presents and estimates demand functions for components of consumer expenditures in Sweden, based on quarterly data for 1963–72. The model employed, while simple, possesses some attractive features. Income elasticities may be different from unity and complementary as well as substitutionary cross price effects are allowed. Aggregation restrictions hold at all points in time. Additional restrictions such as symmetry and zeroes are added. Results for Sweden from the model are compared to earlier findings by Dahlman and Klevmarken, Goldberger and Gamaletsos, Lluch and Powell, and Parks, who have tested double-logarithmic forms, the Linear Expenditure System, and the Rotterdam model.     

Social security, public education and the growth-inequality relationship

We study how the relationship between economic growth and inequality depends upon the levels of funding of two of the largest government programs, public education and social security. We do this in the context of an overlapping generations economy with heterogeneous agents where the government collects a tax on labor income to finance these programs. We show that in our model an increase in government spending on social security reduces income inequality and can have a non-monotonic effect on growth. When the initial level of social security funding is low, as is the case in most poor economies, then its increase will enhance growth. When its funding level is high as is typical for developed countries, we show that its further increase can slow down growth while reducing income inequality. These results obtain regardless of whether the increase in social security funding is financed by a tax increase or by cutting the public education budget. We also find that the effects of increasing the level of public education expenditures or the overall size of the government budget (holding the budget composition fixed) are characterized by similar non-monotonic growth-inequality relationships.