Should Educational Spending Be Redistributed from Higher to Primary Education in LDC's? A Note with Application to Chile

Abstract

Chile lowered relative spending on education at a time when wage dispersion was growing rapidly due to skill-biased demand. This redistribution does not appear to have been justified on efficiency grounds. Furthermore, this redistribution exacerbated the rising relative wages, likely contributing to the rising inequality of earnings in this period, including composition effects. And this redistribution, in combination with the growth of private universities, may have worsened one dimension of intergenerational inequality.