Determinants of household spending on education in the Philippines
Date
2008-10-23
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Abstract
Education financing in the Philippines seems to have a downward movement: national budget share for education is shrinking because of the budgetary fiscal contraction, while the total family expenditure for education is decreasing due to soaring price levels of basic commodities. In response to these recent developments, this paper analyzes the factors affecting the household decision on how much to spend on education and to ascertain which regions are at the margin and are in need of government subsidies for education using FIES 2003 and supplemental macro-level data. Although the decline in public and private spending is the case in point, the enduring question is not so much of how much money there is to spend but how it should be spent. As is evident in the existing literature, the disparity in government spending on education has been dramatic across regions. From here, we find the binding need to address the problem of inequitable allocation of government funds for education in the Philippines.
The estimation results are generally in accord with expectations. We found incremental increases in the total family expenditure escalating the levels of household education expenditure by 5.6%, which is indicative of how wealth characteristics of the household press influence on its spending on education. Moreover, the economic status of the household is found to matter when it concerns the poorest 30%. Contrary to previous studies, we found that the poor significantly spend more on education. We also found a dominant scale effect of the number of household dependents working on the household's spending on education. Education expenditures are found to be modest when the household draws income primarily from wages but significantly higher when the household is agricultural or when the spouse of the head of household is employed. Moreover, we find no isolated regional effects that are significant on the household's expenditure on education. Regional disparities are found to be dramatic when regional effects are combined with that of total family expenditure. In particular, households in Central Luzon, CARAGA and MIMAROPA spend unreasonably more than NCR does, where the largest share of education expenditure in the national funds for education is concentrated.
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Keywords
Household spending, Household expenditure, Family expenditure, Education