1. Issues in Education PERs and Modeling Fiscal Implications of Education Policies
Sajitha Bashir
May 3, 2006

2. Today’s Agenda Introduction Part 1
Issues in Education Public Expenditure Reviews
Part 2
Modeling the fiscal implications of education policies

3. Why analyze public spending in education?
Poverty reduction strategy requires programs/policies that
Augment labor force productivity
Enhance quality of life
Education contributes to both objectives
But other programs are also required
And resources are constrained

4. Is there a rationale for public funding?
Should government finance education?
Externalities: health/fertility/citizenship/gender
Non-competitive markets: small rural communities
Information asymmetries: illiterate people can’t judge quality
Improve equity: rectify historical injustices
Even if justified in general, does not mean all expenditures on education are justified
Do sectoral objectives and expenditures relate to justifications?

5. Is there a rationale for public provision?
Public funding may be justified but is it better to use private sector as provider?
provide per pupil subsidies to private schools
Subsidise teacher salaries? Vouchers?
If public provision is justified, are public programs effective/efficient?
Can outcomes be improved by changing size and distribution of allocations?

6. Private Provision and Financing
PERs should take into account
Extent of private provision by level of education (usually high for secondary/tertiary)
Reasons why private sector does not exist
Equity implications of private provision
Private costs to households of accessing public educational institutions
Students spend on textbooks/tutoring