Education and Development: The Issues and the Evidence

be sustained that it would be both more efficient and more equitable to shift some level
of public subsidy from higher education to lower levels. This is most likely to be the
case where unit cost differentials between educational levels are high, the labour market
shows signs of saturation for particular types of graduates, where primary enrolment
ratios are low suggesting that a large proportion of the population has little access to
any education, and where progressive taxation measures are weak.

There are a number of possible policy options where such conditions pertain. Which are
the most appropriate ones will depend on particular country circumstances. They
include various kinds of efficiency measures to reduce unit costs at higher levels,
planned shifts in subsidy to lower levels, and cost recovery mechanisms to capture
surplus income and reduce subsidy levels. The balance of arguments regarding the
latter, in terms of both equity and efficiency, will depend on the educational level to
which they are to be applied and the detailed nature of their specification. Some of the
possibilities are discussed in the next section.

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