Mind the Gap

While increasing years of schooling has been a long-standing development priority, the associated fiscal costs and benefits have been less studied, because of a lack of appropriate data. Recently, an UNESCO-funded project measured subsidies, by levels of schooling, from all levels of government, in eight developing countries including Nepal. The household-level Nepal Living Standards Measurement Survey provides information to estimate the degree of formality, tax payments, and benefit receipts as a function of schooling years. Using a simple Mincerlike model, this study estimates the fiscal externality of an additional year of school. It finds that within primary school, fiscal benefits and costs, on the margin, are quite balanced, with subsidies close to the present value of future taxes minus benefits. At higher levels of schooling, however, marginal fiscal benefits exceed costs by 5 percent of per capita consumption. This contrasts with previous literature on social returns and assumptions underlying multilateral development goals.

Bibliographic Details

Main Authors:	Bleakley, Hoyt, Guptu, Bhanu
Format:	Journal Article biblioteca
Language:	English en_US
Published:	Published by Oxford University Press on behalf of the World Bank 2023-06-08
Subjects:	TAXATION, SUBSIDIES, SCHOOLING DECISION, NEPAL,
Online Access:	http://documents.worldbank.org/curated/en/099634512122331075/IDU071cd07150ef0804bc80a5700b2315b826e09 https://hdl.handle.net/10986/41304
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