Long-run effects of public expenditure on poverty
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. Governments try to reduce these effects and to promote equality of opportunity. The objective of this paper is to check whether public expenditure has a long-run effect in reducing the probability of being poor when adult, and to what extent. Our main finding is that public expenditure on 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.
KeywordsPublic expenditure on education Poverty rate Intergenerational transmission of poverty
Unable to display preview. Download preview PDF.
We thank Pedro Albarrán, M. Dolores Collado, Laura Crespo and Christophe Muller for helpful comments. We thank participants at Fifth ECINEQ Meeting, 2013 ASSET Meeting, XXXIII Simposio de Análisis Económico and Universitat de les Illes Balears. Marisa would like to thank CREST Paris, where part of this research was carried out, for their hospitality. Financial support from Ministerio de Economía y Competitividad (ECO2014-57413, ECO2012-34928 and ECO2015-65820-P (MINECO/FEDER)), Generalitat Valenciana (Prometeo/2013/037), Junta de Andalucía (SEJ-4941, SEJ-5980) and Instituto Valenciano de Investigaciones Econó micas (IVIE) is gratefully acknowledged.
- Akin, J.S., Garfinkel, I.: The quality of education and cohort variation in black-white earnings differentials: Comment. Am. Econ. Rev. 70(1), 186–191 (1980)Google Scholar
- Atkinson, A.: Macerata Lectures on European Economic Policy. Poverty and the EU: the New Decade. Working Paper 24-2010, Macerata University, Department of Studies on Economic Development (DiSSE) (2010)Google Scholar
- Bellani, L., Bia, M.: Intergenerational poverty transmission in Europe: The role of education. Working Paper Series 2016-02. University of Konstanz, Konstanz (2016)Google Scholar
- Bhalotra, S., Harttgen, K., Klasen, S.: The impact of school fees on schooling outcomes and the intergenerational transmission of education. University of Bristol, Bristol (2015)Google Scholar
- Corcoran, M., Adams, T.: Race, sex and the intergenerational transmission of poverty. In: Duncan, G. J., Brooks-Gunn, J (eds.) Consequences of growing up poor, pp. 461–517. Russell Sage Foundation, New York (1997)Google Scholar
- Hanushek, E.: School resources and student performance. In: Burtless, G (ed.) Does Money Matter? The Effect of School Resources on Student Achievement and Adult Success. Brookings Institution Press, Washingston (1996)Google Scholar
- Hanushek, E.: Spending on schools. In: Moe, T. (ed.) A Primer on American Education, pp. 69–88. Hoover Institution Press, Palo Alto (2001)Google Scholar
- Hertz, T., Jayasunderay, T., Pirainoz, P., Selcuk, S., Smithyy, N., Verashchagina, A.: The Inheritance of Educational Inequality: International Comparisons and Fifty-Year Trends. The B.E. Journal of Economic Analysis and Policy 7, 10 (2007)Google Scholar
- Hidalgo-Hidalgo, M, Iturbe-Ormaetxe, I.: Long-run effects on poverty of public expenditure in education. IVIE-Working Papers AD pp. 2014–06 (2014)Google Scholar
- Jäntti, M., Jenkins, S.: Income mobility. In: Atkinson, A., Bourguignon, F. (eds.) Handbook of Income Distribution, Volume 2B, pp. 807-936. Elsevier, Amsterdam (2014)Google Scholar
- Jenkins, S., Siedler, T.: The intergenerational transmission of poverty in industrialized countries. Chronic Poverty Research Centre Working Paper 75. Institute for Social and Economic Research, University of Essex (2007)Google Scholar
- Jenkins, S., Brandolini, A., Micklewright, J., Nolan, B. (eds.): The Great Recession and the Distribution of Household Income. Oxford University Press, Oxford (2013)Google Scholar
- Marx, I., Nolan, B., Olivera, J.: The welfare state and anti-poverty policy in rich countries. In: Atkinson, A., Bourguignon, F. (eds.) Handbook of Income Distribution, vol. 2B, pp. 2063–2140. Elsevier, Amsterdam (2014)Google Scholar
- Mayer, S.E.: The Influence of Parental Income on Children’s Outcomes: A Review. Report to the New Zealand Ministry of Social Development (2002)Google Scholar
- Morelli, S., Smeeding, T., Thompson, J.: Post-1970 trends in within-country inequality and poverty: Rich and middle income countries. In: Atkinson, A., Bourguignon, F. (eds.) Handbook of Income Distribution, vol. 2A, pp. 596–693. Elsevier, Amsterdam (2015)Google Scholar
- Nolan, B., Marx, I.: Inequality, poverty and social exclusion. In: Salverda, W., Nolan, B., Smeeding, T. (eds.) Oxford Handbook of Economic Inequality. Oxford University Press, Oxford (2009)Google Scholar
- OECD: Crisis squeezes income and puts pressure on inequality and poverty. OECD Publishing, Paris (2013)Google Scholar
- Wolff, P., Montaigne, F., Rojas González, G.: Investing in statistics: EU-SILC. In: Atkinson, A., Marlier, E. (eds.) Income and Living Conditions in Europe, Chapter 2, pp. 38-55. Luxembourg: Eurostat (2010)Google Scholar