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Instituto Valenciano de Investigaciones Económicas


Long-run effects on poverty of public expenditure in education
WP-AD 2014-06
Long-run effects on poverty of public expenditure in education
Hidalgo, M. and Iturbe-Ormaetxe, I.
Year of publication: 2014
Keywords: public expenditure in education, poverty rate, intergenerational transmission of poverty.
JEL Classification: H52, I21, I23, J24, J31
Household characteristics may have long-run effects on individual outcomes in adulthood. For instance, individuals who lived when young in households experiencing financial problems are more likely to be poor when adults. Public intervention in education is one of the most important means by which governments try to reduce these effects and to promote equality of opportunity. The objective of this paper is to check whether public expenditure in education has an effect in reducing the probability of being poor when adult, and to what extent. Our main finding is that public expenditure in primary education has a strong long-run effect on reducing incidence of poverty in adulthood. We also find that this effect is concentrated mainly among individuals who have parents with a low level of education.