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

  title={Estimation of drivers of public education expenditure: Baumol’s effect revisited},
  author={Manabu Nose},
  journal={International Tax and Public Finance},
  • M. Nose
  • Published 1 July 2015
  • Economics
  • International Tax and Public Finance
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… 

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