Antecedents and income distributive effects of public expenditure on education in Malawi

Abstract

The underlying objectives of this study are to find out the main factors that affect public expenditure on education, and to assess how public expenditure on education is targeted and how it affects income distribution in an attempt to reduce poverty in Malawi. Secondary data were collected and Standard Multiple Linear Regression Analysis was used to assess the effects of the antecedents on public expenditure on education. These effects were assessed by using the Benefit Incidence Analysis. These are factors that promote the growth of public expenditure on education. Implementation of universal primary education and per capita income growth increase expenditure on general education while at the primary-education level there are the implementation of universal primary education, per capita income growth, inflation, indirect tax revenue, and the holding of general elections. Further, fiscal deficit leads to the growth of expenditure on secondary education, and foreign grants and public spending on agriculture raise public expenditure on tertiary education. On the other hand, there are other factors that limit the growth of public expenditure on education and these include globalisation at the primary, secondary and general education levels; urbanisation, foreign grants, and lagged expenditure on education at the primary education level; public spending on agriculture and inflation at the secondary education level; and lastly, fiscal deficit decreases public expenditure on tertiary education. It was also found that public expenditure on education improved income equality at the primary-education level, whereas at the secondary and tertiary education levels, it increased income inequality in Malawi. At the macro level, public expenditure on education increased income distribution in 1998 and 2011 in favour of poor households, whereas in 2005, it worsened the income inequality gap between the poor and rich households in Malawi.