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A Note on Recent Policies for Higher Education in Chile
Working paper
Donald Robbins
July 1994 |
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Educational expansion at the primary and secondary levels tends to have an equalizing effect on the distribution of earnings for a given wage structure. However, the resulting change in relative supplies of labor generates an offsetting increase in the wages of more educated workers relative to less educated workers. If changes in the demand for labor are also skill-biased, the unequalizing wage effects will be larger. Moreover,
in countries with higher initial levels of education, private and public rates of return to higher education are often higher than the rates of return to primary and secondary education.This confluence of facts appears to be the case for Chile.
Section I discusses the relationship between educational expansion, government schooling policy, relative wages and relative supply, allowing me to develop a model to analyze the facts for Chile. I show that the redistribution of government spending away from higher education unambiguously contributed to the greater dispersion of relative wages and, when accompanied with skill-biased demand, will easily lead to higher earnings inequality. I also show that, given skill-biased demand, the portion of public spending on education must rise to maintain constant relative wages.
Section II focuses on the potential role of skill-biased
demand, highlighted in Section I, concluding that skill-biased demand may continue in Chile. Thus, relative government expenditures on education, which fell in the 1980’s, will need to increase to maintain constant
relative wages; still further increases would be required to lower relative wages and equalize the earnings distribution.
Section III examines the equity of access to higher e&cation, finding that it seriously deteriorated because of higher fees at traditional universities and the growing dominance of private universities that charge
high fees and give no loans or scholarships.
Section IV asks whether Chile could afford to pay more on higher education and education in general. I find that because public educational spending per GDP fell sharply since 1980 and public spending on higher education fell even more sharply, that Chile both can, and probably should,ease public expenditures on education as a whole and relatively more on higher- education. The recommended form for increasing higher education - that would raise enrollments and equity of access while preserving decentralization, and competition in the provision of educational services - is through means-tested loans and grants. While this issue has begun to receive some attention from the current government, current efforts may not be enough. |
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| Last updated on: 12/15/2006 |
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