How Do Different Households Respond to Public Education Spending?

Shuang Yu and Xiaojun Zhao
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Shuang Yu: School of Economics, Peking University, Beijing 100871, China
Xiaojun Zhao: School of Economics, Peking University, Beijing 100871, China

Sustainability, 2021, vol. 13, issue 20, 1-24

Abstract: Using data from the China Family Panel Studies (CFPS), we developed an educational production function to examine how households with different income levels and parental human capital respond to changes in public spending. Our results suggest that there is a significant complementary effect between household inputs of time and money and public investments in the educational process. However, the results are heterogeneous in terms of different income levels. Rich families have more incentives to invest in their children, suggesting a crowd-in effect of public resources. In contrast, public spending crowds out private inputs for poor families, who care more about their own well-being. Moreover, we show that educational investments in parents have spill-over effects on their children, but the degrees of influence are different for the poor and the rich.

Keywords: public education spending; household inputs; income level; human capital (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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