Looking for a road to get out of poverty. Is the current allocation of public spending on education in Colombia helping?

Extracto

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Looking for a road to get out of poverty. Is the current allocation of public spending on education in Colombia helping?

Only what we have imagined can be constructed. We can not construct a word without poverty if we are not able to conceive such a world.

YUNUS (1998)

SUMMARY

This paper presents a methodology to explore the impact on poverty of the public spending on education. The methodology consists of two approaches: Benefit Incidence Analysis (BIA) and behavioral approach. BIA considers the cost and use of the educational service, and the distribution of the benefits among groups of income. Regarding the behavioral approach, we use a Probit model of schooling attendance, in order to determine the influence of public spending on the probability for the poor to attend the school. As a complement, a measurement of targeting errors in the allocation of public spending is included in the methodology.

KEY WORDS

Poverty, education, public spending.

JEL: H52, I28

Rating: A

1. INTRODUCTION

Public expenditure is one of the main instruments of the Government to reach the desirable objective of helping poor people to escape of their critical condition. Education and health care are primary services that allow people to obtain better quality of life, thus the government should have as one of its priorities the universal provision of these services, either directly or indirectly. However, in countries such as Colombia the government's effort is not reflected in the country's de facto level of poverty, since 60% of the population currently lives under this condition (National Department of Planning of Colombia). (1) It seems like the poverty policies are effective just in keeping the poor alive, but they are not designed and/ or implemented to take the poor out of poverty. (2)

What is wrong with the current allocation of public spending? Are the current beneficiaries the ones who really need the public help, not being able to get the good or service by themselves? Which changes are required to obtain better results in terms of reduction of poverty? These are questions still waiting for an answer.

"Improvement of education and health outcomes is sought because of their intrinsic value in raising capabilities increase and individual freedoms. They also have an instrumental value in contributing to higher incomes, and in reinforcing each other. The main asset of the poor is their labor. Education and health are critical to preserving and enhancing the quality of this asset, and for this reason investment in health and education is especially important for the poor" [(Lanjouw et. all. (2001)]. (3)

As it is well known, public subsidies on investment that enhance human capital--such as education and health care--benefit the poor. Resolving problems in targeting the poor implies i) reallocating public subsidies and ii) dealing with the constraints that keep the poor outside of the group of beneficiaries of the services. In this research, the analysis will be focused on education, considering this service as a high impact public tool that can help to reach superior development levels including the elimination of poverty.

The objective of this paper is to present a methodology for evaluating the impact on poverty of the public spending on education. The idea is to compile proposals of previous research and then to propose complementary methods, in order to obtain a more complete methodology. Specifically, we develop and apply to the case of Colombia two different approaches.

The first approach that we consider is the behavioral approach. For this, we develop a Probit model to determine the impact of public spending on education on the probability of the poor to attend the educational system in Colombia. The model contains the variables that previous researches have found as relevant in determining shool participation, such as a group of household characteristics (schooling years of the head of the household, number of persons in the household) and individual characteristics (ge...

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