The Political Economy of Public Support of Higher Education: Studies in Chile, France and Malaysia

Type Working Paper - The World Bank Discussion Paper
Title The Political Economy of Public Support of Higher Education: Studies in Chile, France and Malaysia
Publication (Day/Month/Year) 1986
Both theoretically and in empirical applications to three countries (Chile, France and Malaysia), this study addresses distributive and investment issues in public subsidization of higher education. First, using alternative criteria to characterize users' and payers' populations (by income, occupational status, education), we challenge conventional short-term methods of assessing the incidence of subsidies and subsidy-tax balances in the perspective of families of origin. It is shown that failure to distinguish appropriate cohort reference populations can lead to major distortions in findings with respect to the distribution of subsidies and who supports them. Also demonstrated is the importance of examining adult life-cycle experiences of successive cohorts with respect to receipt of higher-education subsidies on behalf of their children. Some striking analogies with social security issues are explored. With a shift of focus from a family-of-origin distributive perspective to an investment perspective, private social (societal) and fiscal benefit-cost relationships are compared and contrasted. Particular attention is given to the specification and application of an analytical framework for estimation of fiscal rates of return to public investments in higher education. Each of the countries studied expresses support of such broadly stated values as "equity," "efficiency," and "economic progress," but their relative emphasis varies, and each country is distinctive in its manifestation of these goals. The empirical findings show a high degree of consistency between dominant political expressions of value priorities and public policies in three countries. Nevertheless, the findings support neither equity nor efficiency arguments for general public subsidization of higher education.

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