Publication: Marginal Willingness to Pay for Education and the Determinants of Enrollment in Mexico
Loading...
Files in English
371 downloads
Published
2000-07
ISSN
Date
2015-02-03
Author(s)
Salinas, Angel
Editor(s)
Abstract
Standard benefit-incidence analysis assumes that the subsidy, and quality of education services are the same for all income deciles. This strong assumption tends to minimize the distributional inequity at various education levels. Using a new approach, emphasizing marginal willingness to pay for education, the authors analyze the impact of public spending on the education spending behavior of the average household. They address several questions: What would an average household, with a given set of characteristics be willing to spend on an individual child, with given traits if subsidized public education facilities were unavailable? What would the household have saved by sending the child to public school rather than private school? How great are these savings for various income groups? What are the determinants of enrollment by income group, and by location? How do individuals' education expenditures affect enrollment patterns? Among their findings: 1) The non-poor households in urban areas get much of the subsidy, or "savings" from government provision of education services. 2) The wealthy value private education more than the poor do. 3) Differences in school quality are greater at the primary level. In other words, wealthy households get the lion's share of benefits from public spending on education. Household school enrollment, and transition to the next level of schooling, depend heavily on the cost of schooling, how far the head of the household went in school, the per capita household income, and the housing facilities, or services. But the government's effort also affects the probability of enrollment, and transition. The probability of enrollment is much higher for the 40 percent of higher-income households in urban areas, than it is for the 40 percent of lower-income households in rural areas. The best way to increase school enrollment is to successfully target public spending on education to poor households.
Link to Data Set
Citation
“Salinas, Angel; Lopez-Acevedo, Gladys. 2000. Marginal Willingness to Pay for Education and the Determinants of Enrollment in Mexico. Policy Research Working Paper;No. 2405. © http://hdl.handle.net/10986/21399 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Rigging the Scores: Corruption through Scoring Rule Manipulation in Public Procurement Auctions(Washington, DC: World Bank, 2025-12-02)Public procurement is highly susceptible to corruption, especially in developing countries. Although open auctions are widely adopted to curb it, this paper finds that corruption remains prevalent even within this procurement format. Procurement officers can collaborate with firms to manipulate scoring rules, ensuring predetermined winners, while corrupt firms submit noncompetitive bids to meet minimum bidder requirements. Using extensive data from Chinese public procurement auctions, the paper introduces model-driven statistical tools to detect such corruption, identifying a corruption rate of 65 percent. A procurement expert audit survey confirms the tools’ reliability, with a 91 percent probability that experts recognize suspicious scoring rules when flagged. Firm-level analysis reveals that local, state-owned, and less productive firms are favored in corrupt auctions. Lastly, the paper explores policy implications. Analysis of the national anti-corruption campaign since 2012 suggests that general investigations may be insufficient to address deeply ingrained corrupt practices. Using counterfactuals based on an estimated structural model, the paper shows that implementing anonymous call-for-tender evaluations could improve social welfare by 10 percent by eliminating suspicious rules and encouraging broader participation.Publication Labor Demand in the Age of Generative AI: Early Evidence from the U.S. Job Posting Data(Washington, DC: World Bank, 2025-11-18)This paper examines the causal impact of generative artificial intelligence on U.S. labor demand using online job posting data. Exploiting ChatGPT’s release in November 2022 as an exogenous shock, the paper applies difference-in-differences and event study designs to estimate the job displacement effects of generative artificial intelligence. The identification strategy compares labor demand for occupations with high versus low artificial intelligence substitution vulnerability following ChatGPT’s launch, conditioning on similar generative artificial intelligence exposure levels to isolate substitution effects from complementary uses. The analysis uses 285 million job postings collected by Lightcast from the first quarter of 2018 to the second quarter of 2025Q2. The findings show that the number of postings for occupations with above-median artificial intelligence substitution scores fell by an average of 12 percent relative to those with below-median scores. The effect increased from 6 percent in the first year after the launch to 18 percent by the third year. Losses were particularly acute for entry-level positions that require neither advanced degrees (18 percent) nor extensive experience (20 percent), as well as those in administrative support (40 percent) and professional services (30 percent). Although generative artificial intelligence generates new occupations and enhances productivity, which may increase labor demand, early evidence suggests that some occupations may be less likely to be complemented by generative artificial intelligence than others.Publication Investment Policy Reforms and Foreign Direct Investment Inflows(Washington, DC: World Bank, 2025-12-01)Foreign direct investment has the potential to introduce much-needed capital and expertise in emerging and developing economies. To attract foreign direct investment, many countries have eased restrictions on foreign ownership in various sectors, reformed their institutions, and set up investment promotion agencies. Until the mid-2010s, Ethiopia remained one of the few countries that resisted this trend, with several stringent restrictions in place on foreign direct investment entry and operations in the country. This study employs a synthetic control method to examine patterns in foreign capital inflows following a series of investment policy reforms that were substantively introduced in the mid-2010s (circa 2015). The study offers evidence that investment policy reforms contributed to a significant foreign direct investment inflow in Ethiopia, compared to what would have occurred in the absence of these policies. An alternative strategy that conservatively specifies the donor country pool using an AI-assisted deep search technique changes the donor pool weighting matrix of the synthetic control method, but the estimated policy effects largely remain robust to this specification. The findings highlight the importance of targeted reforms in promoting foreign direct investment inflow in developing countries.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Distribution of Mexico's Public Spending on Education(World Bank, Washington, DC, 2000-07)Research shows that education has played a crucial role in raising levels of earnings and that returns to education in Mexico have increased, particularly in higher education and in the upper tail of the conditional earnings distribution. The authors examine patterns of public spending on education in the face of further increases in earnings inequality. They analyze the incidence of benefits using two sets of data: data on unit costs per student by state and by education level, and data from surveys on household income and spending. Among their findings: Nationally, the poorest income groups get most of the national and state subsidy for primary education. At higher education levels the poor get progressively smaller subsidies. For all Mexico, government spending on primary education is very progressive. In lower secondary education it is neutral. And in upper secondary education it benefits mainly the middle and upper classes. Tertiary education is strongly regressive, benefiting mainly the richest deciles and mainly in urban areas. But those government patterns vary by region. In the central region average total spending is more uniformly distributed than the national pattern. In the northern region the subsidy is progressive. Primary education is neutral and higher levels of instruction are moderately regressive. In the central region primary schooling is very progressive, while lower secondary schooling is almost neutral. Upper secondary and tertiary instruction strongly benefit the richest income deciles. In the southern region basic (primary and lower secondary) education is very progressive, upper secondary education is neutral, and tertiary education is highly regressive. In Mexico City all levels of education except primary are strongly regressive. The authors show that public spending at the tertiary level is more regressive than household spending. So much of public spending on tertiary education favors non-poor families in urban areas that to reallocate the spending so that poor students have a chance to participate would require developing credit markets for higher education. The government's role should be to help overcome market failures in the financial sector, which limit the availability of long-term financing for higher education. These failures can be corrected through student loan programs or means-tested financial aid and scholarship programs. Such programs are rarely devoid of subsidy but are preferable to the direct, cost-free provision of services because the subsidy is targeted more closely to the source of market failure.Publication Professional Development and Incentives for Teacher Performance in Schools in Mexico(World Bank, Washington, DC, 2004-03)The quality of education is a determining factor in competitiveness. In order to globally compete, Mexico would have to raise its standards beyond its current low achievement. Several innovations at federal and state levels have been developed to raise the quality of basic education. One example is Carrera Magisterial (CM), which is a professional development program that was created as part of the National Agreement for the Modernization of Basic Education in 1992. This program is aimed at raising the quality of basic education through teachers' professional training, new learning presence in schools, and improving working and salary conditions this report evaluates the impact of CM. She shows several important results. First, teacher's enrollment in the CM program has a positive impact on learning achievement. Second, family characteristics are important in explaining students' achievement. Third, investment in primary school teachers is most effective when targeted toward increasing teachers' practical experience and developing content-specific knowledge. And fourth, students in schools with a high degree of supervision on the part of the school principal achieve better scores.Publication Teachers' Incentives and Professional Development in Schools in Mexico(World Bank, Washington, DC, 2002-02)The quality of education is a determining factor in a nation's competitiveness. To compete globally, Mexico needs to raise its education standards. Several innovations to raise the quality of basic education at the federal and state levels have been developed: professional training of teachers, new "learning presence in schools," and improvement of working conditions and salaries of teachers. The author examines teachers' incentives and their impact on students' learning achievement. She shows that early in their professional lives, teachers in basic public schools are better paid than in other comparable groups. She also finds that some incentives for teachers at the school level improve learning achievement. For instance, the enrollment of teachers in the Carrera Magisterial program has a positive effect on students' learning achievement. Furthermore, teachers' training is most effective when targeted toward increasing their practical experience and developing content-specific knowledge.Publication Private Non-State Sector Engagement in the Provision of Educational Services at the Primary and Secondary Levels in South Asia : An Analytical Review of Its Role in School Enrollment and Student Achievement(World Bank, Washington, DC, 2014-06)Private (non-state) sector engagement in the provision of educational services at the primary and secondary levels in South Asia has recently undergone remarkable growth. This type of education comes in various forms, such as schools financed and managed by the private sector, schools financed by the government and managed by the private sector, private school vouchers, and tutoring outside the classroom. According to recent household survey data, almost one-third of school-goers aged 6 to 18 years in South Asia go to private schools, with a high concentration in Bangladesh, India, Nepal, and Pakistan. Data for India, Nepal, and Pakistan show that on average, private schools perform at least as well as government schools on student test scores, after controlling for socioeconomic factors, and they do so at significantly lower costs to society. However, student achievement varies greatly across schools of each type, with many weak private schools as well as strong government schools. Substantial, albeit indirect, evidence points to teacher behavior and accountability as an important driver of the effectiveness of private schools. In the long run, however, many factors may play important roles in sustaining the private sector's advantage. Another risk is that overall poor quality in a large government sector may set a low benchmark for the private sector. The findings cast doubt on the effectiveness of government regulations for private schools, given weak institutional capacity. Public-private partnerships with effective accountability mechanisms could leverage both equity and efficiency. Finally, it appears important to understand and customize teaching to the child's individual level.Publication On the Use of Transparent Formulae to Allocate Federal Education Transfers(World Bank, Washington, DC, 2003-12)One of the key questions that arise in discussions of education decentralization, is how federal education resources should be allocated among the various states, and within states, among communities or schools. In general, there are two approaches: (1) bilateral negotiations between the federal government and states with little transparency as to the rules, and (2) formula-based distribution. The authors show that, based on econometric analysis on federal education transfers data in Mexico, the former approach can lead to allocation results that appear contrary to stated policy objectives like equity improvement and greater social inclusion in education. The authors then argue that contrary to common belief, the use of capitation, or per student allocation can improve not only efficiency but also equity. They present a theoretical model to analyze this hypothesis. The authors discuss several variations of the capitation formula, and present an analysis of the characteristics of the winners, and losers of their application, using Mexico as an illustration.
Users also downloaded
Showing related downloaded files
Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.