bia in pakistan

A Benefit Incidence Analysis of Public Spending on Education in Pakistan

Using PSLM Data

Presenters:

Momoko KISHI

Sokpanya PHON

Linghui ZHU

July 15, 2014

Table of Contents1. General background of Pakistan and

objectives2. Introduction of BIA 3. Concentration curve, 4. Data5. Methodology 6. Results7. Discussion and Conclusion

Background

Pakistan:Population:176.75 (millions) Population growth1.80 (%) GDP118.80(US$ billions)

Panjab・ The capital and largest city is Lahore which was the historical capital of the wider Punjab region. Nearly 60% of Pakistan's population lives in the Punjab.・ Punjab has the largest economy in Pakistan, contributing most to the national GDP. The province's economy has quadrupled since 1972. Its share of Pakistan's GDP was 54.7% in 2000 and 59% as of 2010

Sindh・ Sindh has the second largest

economy in Pakistan.

・ Its GDP per capita was $1,400 in 2010 which is 50 per cent more than the rest of the nation or 35 per cent more than the national average.

Khyber Pakhtunkhwa（ KP）

・ The third largest provincial economy in Pakistan.

・ Khyber Pakhtunkhwa's share of Pakistan's GDP has historically comprised 10.5%, although the province accounts for 11.9% of Pakistan's total population.

Balochistan• Balochistan's share of Pakistan's

national income has historically ranged between 3.7% to 4.9%.Since 1972, Balochistan's gross income has grown in size by 2.7 times.

• The resource extraction infrastructure of the province is gradually developing but still lags far behind other parts of Pakistan.

Education Level

Educational Budget

Source : Government of Pakistan Finance Division 2013-14 PP 31

Public expenditure by GDP

UNICEF, Division of Policy and Practice, Statistics and Monitoring Section, www.childinfo.org, May 2008

ResearchObjective Evaluating how government subsidies affect the

distribution of benefits among the population. ―(1)How much do the poor benefit from public spending in education?

　― (2)What is the incidence of education expenditure at each level of education at the national and provincial level?

Government RolesGovernments

Subsidize services

Improving certain critical outcomes among the population

Making education Expenditure

efficiency and equity. (Manasan et

al. 2008)

Making a chance to

break the poverty cycle in

the next generation

Questions typically asked by policy makers:

Who gains from public programs

and policies & how much do they gain?

Who uses public services?

Who benefits from subsidies?

Who are the target groups?

How should transfers be allocated?

How is the allocation or the existing

allocation reaching the poor?

Therefore: very importance to assess the government expenditure on basic public service by employing Benefit Incidence Analysis.

The earliest studies of BIA: World Bank studies by Selowsky (1979) for Colombia and Meerman (1979) for Malaysia.

It brings together elements of the supply of and demand for public services and can provide valuable information on inefficiencies and inequities in government allocation of resources for social services and on the public utilization of these services.

The basic idea of BIA is to evaluate the distribution of government’s spending on public service, education in this case, for different group of population, improving the lives of the poor. (Demery 2000)

What & Why is BIA: Rationales

Concentration Curve

Source: Davoodi et al. (2003)

Concentration CoefficientC

um

ula

tive

Dis

trib

uti

on o

f B

enef

it

Areas to calculate concentration coefficient

Source: Manasan et all, 2008

• Calculation

Index =

while the area of triangle = 0.5

thus the index = 2A

Three kinds of information are used for the calculation of the incidence of government spending on the service it provides.

1. From the following government sources: The information on subsidies provided by the government to public education.

2. The PSLM dataset for 2007/08 was used to find out total household income.

3. Data on current enrollments in Pakistan overall and in the four provinces was also obtained from the PSLM 2007/08 dataset

Data

Based on Asgar & Zahra (2012)

Data

Based on Asgar & Zahra (2012)

Methodology1. Obtain the estimates of the unit cost or subsidy embedded in

the provision of a particular public service.

2. Impute the subsidies to the individual or household identified as a user of the service by using the information available on its use by different income groups.

3. Aggregate individuals or households in groups ordered by income or expenditure (or any other grouping of interest) and arrive at an estimate of the incidence of per capita subsidies accruing to each group.

Methodology

Re-illustrate these steps into algebra function:

E.g.: The total benefit from government spending at all education levels (i.e., the combined primary, secondary, tertiary, and other spending) accruing to group j is estimated as

X i, j = Si = Ei, j (1)

i = level of education, j = population decile groups

where Eijrepresents the number of students enrolled in level i* from group j, and Si/Eiis the unit cost of providing education at level i.

* Spending on education may occur at more than four levels, but we have focused on the four levels as in various other studies.

Methodology

Therefore, the total benefit from government expenditure at all levels of education accruing to group j* is

X j = (2)

Then substituting equation (1) into equation (2), we can arrange it as follows:

X j = = (3)

Sources: Asghar, Z. & Zahra, M. (2012)* Population is ranked from poorest to richest using per capita income, and aggregated into deciles.

Result ITable 4: Enrolment and distribution of expenditure on education in Pakistan

by level of education and income group, 2007/08 (National Level)

* Total education expenditures at the national level have been allocated to each income decile according to their share in total enrolment.

Based on Asgar & Zahra (2012)

Result I

0 0.2 0.4 0.6 0.8 1 1.20

0.2

0.4

0.6

0.8

1

1.2

Figure 3: Distribution of government expenditure in Punjab on education and distribution of income

PE line primary secondary tertiary other

Cumulative percent of population

Cum

ulat

ive

perc

ent o

f en

rolm

ent

Based on Asgar & Zahra (2012)

Result I

0 0.2 0.4 0.6 0.8 1 1.20

0.2

0.4

0.6

0.8

1

1.2

Figure 4: Distribution of government expenditure in Sindh on education and distribution of income

PE line primary secondary tertiary other

Cumulative percent of population

Cum

ulat

ive

perc

ent o

f en

rolm

ent

Based on Asgar & Zahra (2012)

Result I

0 0.2 0.4 0.6 0.8 1 1.20

0.2

0.4

0.6

0.8

1

1.2

Figure 5: Distribution of government expenditure in KP on educa-tion and distribution of income

PE line primary secondary tertiary other

Cumulative percent of population

Cum

ulat

ive

perc

ent o

f en

rolm

ent

Based on Asgar & Zahra (2012)

Result I

0 0.2 0.4 0.6 0.8 1 1.20

0.2

0.4

0.6

0.8

1

1.2

Figure 6: Distribution of government expenditure in Balochistan on education and distribution of income

PE line primary secondary tertiary other

Cumulative percent of population

Cum

ulat

ive

perc

ent o

f en

rolm

ent

Based on Asgar & Zahra (2012)

Results II• Concentration index for all provinces for different education levels

Concentration index

PrimarySecondar

yTertiary Other

Punjab-0.2156 0.0969 0.4805 0.1575

Sindh-0.3266 -0.1218 0.2607 -0.098

KP-0.1182 0.0536 0.3586 0.0173

Balochistan-0.317 -0.1629 0.193 -0.1123

Based on Asgar & Zahra (2012)

Discussion & Conclusion• Government spending is progressive at the primary level of

education, meaning that lower-income groups are its main beneficiaries—these results hold at the national and provincial level.

• However, lower-income groups benefit least from public spending on higher education, implying that government spending is regressive at the higher education level — at both the national and provincial level.

• Therefore, “Right to free and Compulsory Education Bill 2012” unanimously to ensure free and compulsory education to all children of aged five to sixteen years was enshrined in the Article 25-A of the Constitution.

References• Asghar, Z. & Zahra, M. (2012). A Benefit Incidence Analysis of Public

Spending on Education in Pakistan Using PSLM Data. The Lahore Journal of Economics. 17(2). pp. 111-136

• Davoodi, H.R., Erwin R.T., and Sawitree S.A. (2003). How Useful are Benefit Incidence Analysis of Public Education and Health spending. IMF Working Paper 03/227. International Monetary Fund. Washington D.C.

• Demery, Lionel (2000). Benefit Incidence: A Practitioner’s Guide. The World Bank. Washington, D.C.

• Manasan, R.G., Janet S. C., and Eden, C.V. (2008). Benefit Incidence of Public Spending on Education in the Philippines.  Discussion paper series No. 2008-8. Philippine Institute for Development Studies.

Thank you for your concentration!