Estimation of drivers of public education expenditure: Baumol’s effect revisited

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 increa...

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Veröffentlicht in:International tax and public finance 2017-06, Vol.24 (3), p.512-535
1. Verfasser: Nose, Manabu
Format: Artikel
Sprache:eng
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Zusammenfassung: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.
ISSN:0927-5940
1573-6970
DOI:10.1007/s10797-016-9410-7