Globalization, Redistribution, and the Composition of Public Education Expenditures

CESifo Working Paper No. 2917

Globalization, Redistribution, and the
Composition of Public Education Expenditures

Abstract

We analyze whether globalization affects the composition of public expenditures for
education by integrating arguments from the Heckscher-Ohlin and the tax competition
literature into a common theoretical framework. The model suggests that with increasing
global integration, developing countries have strong incentives to shift public education
expenditures towards lower education. In industrialized countries, on the other hand,
globalization has an ambiguous effect on the composition of public education expenditures.
We test and confirm these hypotheses with data on 86 countries over the 1999-2006 period.

JEL-Code: F15, H42, H52.

Keywords: globalization, public education, composition of public spending.

Thushyanthan Baskaran
Alfred-Weber Institute for Economics
University of Heidelberg
Bergheimer Strasse 58

69115 Heidelberg

Germany

[email protected]
heidelberg.de

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