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Globalization and the Composition of Public Education Expenditures: A Dynamic Panel Analysis

Baskaran, Thushyanthan and Hessami, Zohal (2010): Globalization and the Composition of Public Education Expenditures: A Dynamic Panel Analysis.

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Abstract

This paper studies the relationship between globalization and the composition of public education expenditures. The theoretical model is embedded in a median voter setting and is based on the assumption that globalization leads to lower tax revenues as well as an increase in the relative wage of high-skilled workers. Overall, the theoretical discussion suggests that globalization induces a shift from primary to tertiary education expenditures, which is backed up by empirical evidence from dynamic panel estimations for 121 countries over the 1992 - 2006 period. A possible implication of the shift in educational priorities towards higher education is an increase in income inequality.

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