On the causality between household and government spending on education: evidence from a panel of 40 countries

Naurin, Abida and Pourpourides, Panayiotis M. ORCID: https://orcid.org/0000-0002-2986-4094 2023. On the causality between household and government spending on education: evidence from a panel of 40 countries. Empirical Economics 10.1007/s00181-022-02345-y

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Abstract

This paper sheds light on an important causality which is of primary interest for policy makers, at both country level and broad institutional level, though it is largely ignored in the literature. Using panel data from a diversified group of countries and after controlling for various factors and endogeneities within the context of multivariate models, we present evidence that an increase in the intensity of government spending on education leads to an overall increase in the intensity of household spending on education of a roughly equal magnitude, within a span of two years. Specifically, a 1% increase in the intensity of government spending on education induces a contemporaneous increase in the intensity of household spending on education of 3%, followed by a correction of 2% the subsequent year. We further find that the reverse causality does not hold. Our mediation analysis within our set of variables suggests that the causality is only direct, and that there is no statistically significant distinction between low- and high-income countries.

Item Type:	Article
Date Type:	Published Online
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Springer
ISSN:	0377-7332
Date of First Compliant Deposit:	7 December 2022
Date of Acceptance:	7 December 2022
Last Modified:	04 Jan 2023 16:02
URI:	https://orca.cardiff.ac.uk/id/eprint/154702

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