Education spending, economic development, and the size of government

Mark Millin (), David Fielding and Dorian Owen
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Mark Millin: Department of Economics, University of Auckland, New Zealand

Public Sector Economics, 2023, vol. 47, issue 3, 285-333

Abstract: We examine the association between economic development and two measures of public spending on education: the “national effort” (public spending on education as a proportion of GDP) and “budget share” (public spending on education as a proportion of total government spending). Using panel data for a large sample of countries from 1989 to 2015, we compare mean levels of national effort and budget share measures for economically and politically distinct groups of countries. We find that economically more developed (richer) countries are characterised by a higher national effort and a lower budget share than less economically developed countries. This implies that richer countries, on average, have larger public sectors than poorer countries, consistent with Wagner’s law and Baumol’s “cost disease” hypothesis.

Keywords: education spending; Wagner’s law; Baumol’s cost disease; economic development; democracy (search for similar items in EconPapers)
JEL-codes: H52 I22 I25 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ipf:psejou:v:47:y:2023:i:3:p:285-333

DOI: 10.3326/pse.47.3.1

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