Title: Education services and reallocation of government expenditure

Authors: Claudio Socci; Maurizio Ciaschini; Lorenzo Toffoli

Addresses: Department of Economics and Law, University of Macerata, Via Crescimbeni 14, 62100 Macerata, Italy ' Department of Economics and Law, University of Macerata, Via Crescimbeni 14, 62100 Macerata, Italy ' Department of Economics and Finance, Catholic University of Milan, Largo Gemelli 1, 20123 Milan, Italy

Abstract: The aim is to design and evaluate balanced budget policies that reallocate federal funds from investments in national defence to the education system. The research focuses on changes in income of the institutional sectors, on output changes at the commodity level and on the increase in the stock of human capital that originates in higher education. The latter is estimated by a cost-based approach on the basis of the changes in the production of human-capital related services. A suitable framework for conducting this kind of analysis is a dynamic extended multi-sectoral model. In this framework it is possible to account for direct, indirect and induced effects produced by the policy proposed. The observed results show that education expenditure is superior to defence expenditure. Indeed, reallocating federal funds from investment in national defence to the education system is convenient in terms of income, production activity and human capital accumulation.

Keywords: education expenditure; government expenditure; dynamic extended multi-sectoral model; education services; expenditure reallocation; human capital; higher education; budget reallocation; defence expenditure; federal funds.

DOI: 10.1504/IJEED.2015.068359

International Journal of Education Economics and Development, 2015 Vol.6 No.1, pp.38 - 58

Received: 16 Oct 2014
Accepted: 20 Nov 2014
Published online: 31 Mar 2015 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article