The misallocation of public sector educational spending across inputs that leads to underspending on productive inputs like books, instructional materials, and facilities is due to political forces—and thus requires political solutions.
The accumulated results of empirical studies show that the public sector typically chooses spending on inputs such that the productivity of additional spending on books and instructional materials is 10 to 100 times larger than that of additional spending on teacher inputs (for example, higher wages, smaller class size). Pritchett and Filmer argue that this pervasive and systemic deviation of actual spending from the technical optimum requires a political, not economic or technical, explanation. The evidence is consistent only with a class of positive models in which public spending choices are directly influenced by a desire for higher spending on teacher inputs, over and above their role in producing educational outputs. This desire could be due either to teacher power, or bureaucratic budget-maximizing behavior, or political patronage. Pritchett and Filmer conclude by exploring the implications of these positive political models of educational spending behavior for various types of proposed educational reforms (localized control, parental participation, vouchers, and so on) which requires an examination of how the proposed reforms shift the relative powers of the stakeholders in the educational system: students and parents, educators, bureaucrats, and politicians.
This paper—a product of the Poverty and Human Resources, Development Research Group—is part of a larger effort in the department to understand and improve the efficacy of social service provision. The study was funded in part by the Research Support Budget under the research project "Rationale for Education Reform" (RPO 681-12). Copies of this paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Sheila Fallon, room N8-030, telephone 202-473-8009, fax 202-522-1153, Internet address sfallon@worldbank.org. (49 pages)
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