Riham Rizk The British University in Egypt(BUE)

Hala Abou-AliFEPS, Cairo University

Household and Individual Determinants on off-spring’s Educational Expenditure : Evidence from Arab countries

ERF Workshop on education in The ERF Region

Overview

Motivation

Data and methodology

Empirical results

Stylized facts

Conclusion and recommendations

Motivation

Education is at the top of the reform agenda for many policymakers in the Arab countries especially in Egypt.

Education is considered an antidote for reducing poverty levels and promoting economic growth, both at the national and household levels.

Education is seen as a solution against authoritarian governments and a condition for achieving democracy.

Where is the problem, then ? (1/2)

The average level of education among MENA population is still very low compared to East Asia and Latin America. The average gross enrollment in the secondary school was: about 75% in MENA,

78% in East Asia and 90% in Latin America. The average gross enrollment in higher education reached about 26% in 2003 in

MENA which represent two-thirds of the other two regions average. Spending on education as a percentage of GDP reaches 5% compared to 3.6%

and 3.9% in East Asia and Latin America, respectively.

This could be attributed to the free education applied to secondary and higher education compiled. Altogether, lead to low level of Arab countries human capital.

*Reference :World Bank ( 2008)

Where is the problem, then ? (2/2)

There is a huge concern to public expenditure on education while continuing ignoring the household expenditure quantum proves to lead to incorrect long run government educational policies.

The relation between public and private spending could be either complementary or substitute.

Objectives

To what extent the amount of household income affects the demand on education in Arab countries?

What are the patterns of household education expenditures in Arab countries? And, to what extent it differs with household and individual characteristics ?

What are the various factors that determine household and individual expenditure on education in Arab countries? Do they differ from one country to another in the region? And why?

Data

ERF-OAMDI Harmonized Household Income and Expenditure Surveys 2010/2011 for

Egypt, Jordan, Palestine, Tunisia, and Sudan 2009.

Methodology (1/2)

To estimate individual and household determinants of education expenditure , we use Robust OLS model to reduce Heteroscedasity problem. Thus , logged annual household expenditure was regressed on various family characteristics such as Household income, Father’s education , Mother’s education, Father’s

occupation, Mother’s occupation, number of children at each different age categories and geographic residence.

The conceptual model follows Mincer’s schooling model :Mincer’s schooling model :

Log HHEX=Log HHEX=αα + +ββggww++γγXXii++ЄЄ

Methodology (2/2)

FirstFirst, Pooled sample model including all individualistic characteristics for the family is estimated.

SecondSecond, the full sample was divided into income quintiles and the same model was estimated separately for each subsample, in order to examine at each income level the effects of family characteristics on household’s expenditure pattern on education following Quang (2012).

ThirdThird , we grouped the sample by children’s age to study the link between the economic circumstances and patterns of educational allocation among the school-aged children following Hannum (2005) and Qian & Smyth (2010). The model was estimated separately for each subsample with pre- and primary school aged children, secondary-aged and college-aged children focusing on income effect and geographic location.

FinallyFinally, the Mincerian model is regressed again on the various household characteristics was namely, household income, head’s education, head’s occupation, household’s number of children and household's geographic location.

Results highlight(1/4)

The main findings that emerge from this study are three folds:

Household income has significant effects on the magnitude of educational expenditure

Education and occupation of household “head” “Mother’s and father’s” matter.

Households place of residence has a significant impact.

Results highlight(2/4)Individual Determinants..

A)Using log Total Household educational expenditure Log (HH Educational expenditure) Egypt Tunisia Jordon Palestine Sudan Father's education level

Primary 0.175*** 0.055 0.113 0.290*** -0.026

Secondary 0.302*** 0.171*** 0.283** 0.416*** 0.209***

Tertiary 0.397*** 0.214*** 0.704*** 0.751*** 0.599***

Mather's education level

Primary 0.278*** 0.162** 0.039 0.074 0.279***

Secondary 0.390*** 0.140*** 0.099 0.454*** 0.538***

Tertiary 0.485*** 0.201*** 0.512*** 0.403*** 0.623***

Household decomposition

No. Pre-primary school age children -0.194*** 0.015** -0.445*** -0.227*** -0.200***

No. of Secondary-age children 0.103** -0.125** -0.536** -0.157** 0.081**

No. of college -age children 0.715*** 0.669*** 0.488*** 0.234*** 0.529***

Household income

Income quintile 2 0.290*** 0.234*** 0.024 0.036 0.072

Income quintile 3 0.423*** 0.490*** 0.190* 0.229*** 0.275***

Income quintile 4 0.499*** 0.721*** 0.170* 0.294*** 0.365***

Income quintile 5 1.002*** 1.094*** 0.394*** 0.418*** 0.899***

Egypt Jordon Palestine Sudan

Father’s occupation

Cadres 0.327*** -0.712 0.439*** #

Middle professional 0.137** 0.377*** 0.218***

Lower professional -0.038 0.283*** 0.180***

Blue collar and service -0.014 -0.015 0.082

Unemployment 0.015 -0.649*** -0.032

Mother’s occupation

Cadres 0.028 -0.441 0.541**

Middle professional 0.029 0.219* 0.551***

Lower professional 0.035 -0.49 0.185***

Blue collar and service 0.128*** -0.653 -0.079

Unemployment -1.106 -0.054 -0.194

Household Place of residence Lower Egypt North West Bank Western

-0.371*** -0.397*** 0.105*** 0.155***Upper Egypt South Eastern

-1.215*** -0.598*** 0.123**Northern

0.032N 10276 3046 11394 6144

R-square 0.441 0.459 0.324 0.377

Results highlight(3/4)Table (2): Using Log Share of Educational Expenditure Log (Education share ) Egypt Jordon Palestine Sudan Father's education level

Primary 0.169*** 0.09 0.276*** 0.007Secondary 0.298*** 0.219** 0.430*** 0.220***

Tertiary 0.442*** 0.638*** 0.762*** 0.689***Mather's education level

Primary 0.301*** 0.094 0.039 0.201***Secondary 0.403*** 0.175 0.402*** 0.410***

Tertiary 0.590*** 0.572*** 0.360*** 0.538***

Household decomposition No. Preschool age children -0.198*** -0.443*** -0.228*** 0.017

No. of secondary age children 0.706*** 0.497*** 0.232*** 0.276***No. of college -age children -0.032** 0.504*** 0.515*** 0.425***

Household income Income quintile 2 -0.03 -0.388*** -0.722*** -0.800***Income quintile 3 -0.121*** -0.495*** -0.936*** -1.127***Income quintile 4 -0.286*** -0.869*** -1.235*** -1.504***Income quintile 5 -0.269*** -1.235*** -1.735*** -1.837***

Egypt Jordon Palestine Sudan Household Place of

residence Lower Egypt North West Bank Western

-0.346*** -0.367*** 0.105*** 0.288***Upper Egypt South Eastern

-1.162*** -0.543*** 0.014Northern

-0.003N 10276 3046 11394 6144

R-square 0.441 0.382 0.314 0.267

Results highlight(4/4)Household Determinants of Education Expenditure

Egypt Tunisia Jordon Palestine Sudan Dependent variable : Log educational Expenditure

Household IncomeSecond quintile 0.367*** 0.259*** 0.401*** 0.142 0.217***Third quintile 0.542*** 0.502*** 0.755*** 0.243** 0.341***

Fourth quintile 0.711*** 0.776*** 0.862*** 0.573*** 0.465***Fifth quintile 1.190*** 1.117*** 1.694*** 0.768*** 0.985***

Household's head education

Primary 0.230*** 0.042 0.560*** 0.297*** 0.237***Secondary 0.490*** 0.186*** 1.275*** 0.570*** 0.519***

College 0.812*** 0.303*** 1.521*** 0.800*** 0.986***Number of school -aged

children No. of pre-Prim school-

aged children 0.126*** 0.213*** -0.166*** -0.133*** 0.003No. of secondary school

aged children 0.438*** 0.304*** 0.09 0.055 0.316***No. of college-aged

children 0.090*** 0.223*** 0.305*** 0.527*** 0.378***N 4233 6406 1881 2659 2624

R-square 0.391 0.229 0.257 0.229 0.255

Stylized Facts (1/3)

Stylized Facts (2/3)

Stylized Facts (3/3)

Recommendations

Conditional cash transfers

Subsidies

Thank you

REHAM RIZK

ASSISTANT PROFESSOR BRITISH UNIVERSITY IN EGYPT

REHAM.RIZK@BUE.EDU.EG