An analysis of household and government spending on education in South Africa.

Abstract

Education is one of the largest components of government spending across developing and developed countries. Differences in spending on education are often cited as the key contributors to achievement gaps between countries and individuals in the same country. In South Africa, education has been central to government’s socio-economic redistributive policies following the end of apartheid. The problem of insufficient funding particularly for higher education combined with a high demand for education have led to shared costs between households and government. To this effect, the study analyses the relative roles of spending across schooling levels between households and the government. The study further examines attendance and expenditure pattens on education between private and public institutions. Using household level data from the South African Living Conditions Survey 2014/2015, Tobit regressions using a number of household characteristics (such as the gender of the household head, their employment status, population group, level of education, the number of children attending and settlement type of the household) are estimated to examine if and to what degree the determinants of educational expenditure differ by income groups. In addition, income elasticities of education spending are calculated to determine the sensitivity of household’s spending to changes in income. The results show that spending of richer households on education is likely to be more sensitive to changes in household income than poorer households.