More on the effectiveness of public spending on health care and education: a covariance structure model

Abstract

Using data for a sample of developing countries and transition economies, this paper estimates the relationship between government spending on health care and education and selected social indicators. Unlike previous studies, where social indicators are used as proxies for the unobservable health and education status of the population, this paper estimates a latent variable model. The findings suggest that public spending is an important determinant of social outcomes, particularly in the education sector. Overall, the latent variable approach yields better estimates of a social production function than the traditional approach, with higher elasticities of social indicators with respect to income and spending, therefore providing stronger evidence that increases in public spending do have a positive impact on social outcomes. Copyright © 2003 John Wiley & Sons, Ltd.

Effect of public health expenditure on health status in Ghana

“…The results were obtained after controlling for consumption and literacy levels. The findings reported from 111 developing and transition countries by Baldacci et al (2002) also support the argument that public health spending is effective in improving health status. A similar study by Issa and Ouattara (2005) found that health expenditure reduces infant mortality.…”

Resilience to Crisis Through Social Protection Can We Build the Case?

“…Studies by Anand and Ravallion (1993) and Psacharopoulos and Patrinos (2002) support a positive correlation between public social spending and education and health outcomes. Baldacci et al (2003) come to the same conclusion, with education outlays showing up as a stronger determinant of social indicators than health expenditure. On the other hand, a number of studies find no significant relationship between public spending on education and education outcomes Tan 1992, 1998) or between health outlays and health status (Filmer et al 1998).…”

Social Spending and Aggregate Welfare in Developing and Transition Economies

“…Similarly, Baldacci et al (2003) provide evidence that social spending is an important determinant of social outcomes, particularly in the education sector.…”

“…15 Income is one of the crucial determinants of health status (Pritchett and Summers 1996). A number of studies also show that higher levels of female education are associated with better health status of children as well as the population in general ( 2008), we include the share of female students in primary and secondary schools as an indicator for gender equality, which takes account of the institutional factors that may have signi…cant bearing on child health through female education.…”