Moreon the Effectiveness of Public Spendingon Health Care and Education: A Covariance Structure Model

May 1, 2002

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Moreon the Effectiveness of Public Spendingon Health Care and Education: A Covariance Structure Model, (USA: International Monetary Fund, 2002) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Using data for a sample of developing and transition countries, this paper estimates the relationship between government spending on health care and education, and social indicators. Unlike previous studies, where social indicators are used as proxies for the unobservable health and education status of the population, this paper estimates a latent variable model. The findings suggest that public social spending is an important determinant of social indicators, particularly in the education sector. Overall, the latent variable approach was found to yield more adequate estimates of social production functions, with larger elasticities of social indicators with respect to income and spending on education than the traditional approach, providing stronger evidence that increases in public spending have a positive impact on social indicators. The study also finds that the millennium goal of universal primary education enrollment by 2015 could be achieved through an increase by one-third, on average, in education spending.

Subject: Education, Education spending, Expenditure, Health, Health care spending

Keywords: Government spending, Rate, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/090
Stock No:

WPIEA0902002
ISBN:

9781451851403
ISSN:

1018-5941

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