Human Capital Inequality and the Composition of Education Expenditure

Income Inequality and Education

A Human Capital Inequality and the Composition of Education Expenditure

Hwang, Jinyoung. (2011). A cross-country analysis of human capital inequality and the composition of education expenditure. European Journal of Social Sciences, 24 (1):

According to Hwang (2011), it has been observed in previous literature that substantially inequitable societies in terms of income distribution tend to spend more on tertiary education (university-level education) than lower-level education. "Wealth distribution is a plausible explanation for the distributional bias of government expenditure on education, as long as the distribution of wealth determines the existence and number of organized group[s] in an economy" (Hwang 2011: 97). This discrepancy could be explained by the fact that the rich tend to send their children to private schools not subsidized by the state for lower-level education, or to better-funded, locally funded secondary institutions and thus only need substantial federal support for education at the tertiary level. The wealthier and more powerful members of society are still dependent upon tertiary education for their children. Although subsidizing lower-level education could substantially benefit the poor, those who could benefit the most from education are denied this 'leg up' into the middle or upper classes.

Hwang's hypothesis was that "countries with greater wealth inequalities occasionally expand more resources on tertiary education than on primary or secondary education" (Hwang 2011: 97). Hwang focused on inequities in distribution of wealth, versus distribution of land and other resources, in contrast to previous studies. To prove this thesis, 81 countries over five-year intervals from 1975 to 2000 were assessed in terms of their expenditures on education in terms of spending on tertiary education vs. other types of education as a percentage of GDP per capita, using regression analysis (Hwang 2011: 97-98). Hwang did not differentiate the countries according to 'types' other than wealth distribution. The analysis confirmed that a "country with a higher human capital inequality results in the persistence of a higher ratio of tertiary education expenditure to primary and secondary education expenditure" (Hwang 2011: 98).

The implications of this research are significant, given that it indicates that government policies tend to exacerbate, rather than close the gaps between the 'haves' and 'have-nots.' This is characterized as the 'rent-seeking' behavior of the very rich. The rich seek to solidify their places in society by ensuring that their children are well-educated, while those who are poor with a less strong voice in both society and politics are denied the educational tools of self-improvement.

An additional issue not addressed in the study is the fact that children of the wealthy in many nations also have the option of sending their children abroad to be educated if the parents feel that the education within their home nation is not of sufficient quality. This can be seen in many universities in the United States and the United Kingdom, which are widely-reputed to house some of the finest institutions of higher education in the world. This 'safety valve' takes further pressure off of a government to provide a high-quality education for all of its citizens.