The Effect Of Public Education Spending On Household Education Spending And Its Difference Between Urban And Rural

This paper studies the impact of public education spending on household education spending and its difference between urban and rural families.Public education spending and household education spending constitute the two main sources of education investment.We first develop an Over-Lapping Generation(OLG)model which contains family intergenerational exchange to investigate the impact of public education spending on household education spending and its influencing factors.The result of theoretical model shows that public education spending has a positive "Crowding-in" effect on household education spending,and the intensity of "Crowding-in" effect depends on the family structure and the transfer efficiency of public education system.We employ Tobit model and Heckman two-stage method to analyze the data from 2013-2014 China Education Panel Survey and to document robust evidence that increases in public education spending are associated with significant heterogeneous increases in household education spending in both urban and rural China,suggesting multi-dimensional demands for household non-compulsory education spending.The urban families with fewer children and elder have more significant "Crowding-in" effect.Public education transfer efficiency also has a positive impact on the intensity of the"Crowding-in" effect.The evidence demonstrates that the differences of family structure and public education transfer efficiency are two of the main reasons for the "Crowding-in" effect' s difference between urban and rural families.