Mind the Gap: Schooling, Informality, and Fiscal Externalities in Nepal

Hoyt Bleakley and Bhanu Gupta

The World Bank Economic Review, 2023, vol. 37, issue 4, 659-674

Abstract: While increasing years of schooling has been a long-standing development priority, the associated fiscal costs and benefits have been less studied, because of a lack of appropriate data. Recently, an UNESCO-funded project measured subsidies, by levels of schooling, from all levels of government, in eight developing countries including Nepal. The household-level Nepal Living Standards Measurement Survey provides information to estimate the degree of formality, tax payments, and benefit receipts as a function of schooling years. Using a simple Mincer-like model, this study estimates the fiscal externality of an additional year of school. It finds that within primary school, fiscal benefits and costs, on the margin, are quite balanced, with subsidies close to the present value of future taxes minus benefits. At higher levels of schooling, however, marginal fiscal benefits exceed costs by 5 percent of per capita consumption. This contrasts with previous literature on social returns and assumptions underlying multilateral development goals.

Keywords: taxation; subsidies; schooling decision; Nepal (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/wber/lhad013 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Mind the Gap: Schooling, Informality and Fiscal Externalities in Nepal (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:wbecrv:v:37:y:2023:i:4:p:659-674.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The World Bank Economic Review is currently edited by Eric Edmonds and Nina Pavcnik

More articles in The World Bank Economic Review from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().