IDEAS home Printed from https://ideas.repec.org/p/ash/wpaper/46.html
   My bibliography  Save this paper

Mind the Gap: Schooling, Informality and Fiscal Externalities in Nepal

Author

Listed:
  • Hoyt Bleakley

    (University of Michigan)

  • Bhanu Gupta

    (Department of Economics, Ashoka University)

Abstract

While increasing average years of school has been a development priority for decades, the associated fiscal costs and benefits have been less studied, in part because of the lack of appropriate data. Recently UNESCO organized a project measuring the extent of subsidies, by level of schooling, from all levels of government, in eight developing countries. One of these countries was Nepal, which also has a household budget survey that permits us to estimate the degree of formality, tax payment, and benefit receipt as a function of years of schooling. Using a simple Mincer-like model, we estimate the fiscal externality associated with an additional year of school. In contrast to previous literature on social returns and assumptions underlying multilateral development goals, we find that within primary school, fiscal benefits and costs, on the margin, are quite balanced, with subsidies closest to the present value of future taxes minus benefits. At higher levels of schooling, however, marginal fiscal benefits exceed costs by 5 percent of per-capita consumption.

Suggested Citation

  • Hoyt Bleakley & Bhanu Gupta, 2020. "Mind the Gap: Schooling, Informality and Fiscal Externalities in Nepal," Working Papers 46, Ashoka University, Department of Economics.
  • Handle: RePEc:ash:wpaper:46
    as

    Download full text from publisher

    File URL: https://dp.ashoka.edu.in/ash/wpaper/paper46_0.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. William R. Johnson, 2006. "Are Public Subsidies to Higher Education Regressive?," Education Finance and Policy, MIT Press, vol. 1(3), pages 288-315, June.
    2. Henrik Jacobsen Kleven & Martin B. Knudsen & Claus Thustrup Kreiner & Søren Pedersen & Emmanuel Saez, 2011. "Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark," Econometrica, Econometric Society, vol. 79(3), pages 651-692, May.
    3. George Psacharopoulos & Harry Anthony Patrinos, 2018. "Returns to investment in education: a decennial review of the global literature," Education Economics, Taylor & Francis Journals, vol. 26(5), pages 445-458, September.
    4. Azuara, Oliver & Marinescu, Ioana, 2013. "Informality and the expansion of social protection programs: Evidence from Mexico," Journal of Health Economics, Elsevier, vol. 32(5), pages 938-950.
    5. Hoyt Bleakley, 2018. "Longevity, Education, and Income: How Large is the Triangle?," NBER Working Papers 24247, National Bureau of Economic Research, Inc.
    6. Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
    7. Rodrigo R. Soares & Daniel Haanwinckel, 2017. "Fighting employment informality with schooling," IZA World of Labor, Institute of Labor Economics (IZA), pages 394-394, October.
    8. Lopez, Humberto, 2008. "The social discount rate : estimates for nine Latin American countries," Policy Research Working Paper Series 4639, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cécile Bonneau & Sébastien Grobon, 2022. "Unequal access to higher education based on parental income: evidence from France ," World Inequality Lab Working Papers halshs-03693195, HAL.
    2. Bosch, Mariano & Manacorda, Marco, 2012. "Social policies and labor market outcomes in Latin America and the Caribbean: a review of the existing evidence," LSE Research Online Documents on Economics 58003, London School of Economics and Political Science, LSE Library.
    3. Matteo Bobba & Luca Flabbi & Santiago Levy, 2022. "Labor Market Search, Informality, And Schooling Investments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 211-259, February.
    4. François Gerard & Gustavo Gonzaga, 2011. "Unemployment Insurance in Developing Countries: The Case of Brazil," Textos para discussão 593, Department of Economics PUC-Rio (Brazil).
    5. Ana Isabel Lopez Garcia, 2016. "State Healthcare and the Impact of Remittances on Turnout in Mexico," Remittances Review, Remittances Review, vol. 1(1), pages 65-104, October.
    6. Cécile Bonneau & Sébastien Grobon, 2022. "Parental Income and Higher Education Patterns: Evidence From France," Documents de travail du Centre d'Economie de la Sorbonne 22005rr, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Dec 2023.
    7. François Gerard & Gustavo Gonzaga, 2013. "Informal Labor and the Cost of Social Programs: Evidence from 15 Years of Unemployment Insurance in Brazil," Textos para discussão 608, Department of Economics PUC-Rio (Brazil).
    8. Puklavec, Žiga & Kogler, Christoph & Stavrova, Olga & Zeelenberg, Marcel, 2023. "What we tweet about when we tweet about taxes: A topic modelling approach," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1242-1254.
    9. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," Working Papers halshs-01179445, HAL.
    10. Arun Advani & William Elming & Jonathan Shaw, 2023. "The Dynamic Effects of Tax Audits," The Review of Economics and Statistics, MIT Press, vol. 105(3), pages 545-561, May.
    11. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    12. Marie Bjørneby & Annette Alstadsæter & Kjetil Telle, 2018. "Collusive tax evasion by employers and employees. Evidence from a randomized fi eld experiment in Norway," Discussion Papers 891, Statistics Norway, Research Department.
    13. Montalvo, José G. & Piolatto, Amedeo & Raya, Josep, 2020. "Transaction-tax evasion in the housing market," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    14. Ji Liu, 2024. "Education legislations that equalize: a study of compulsory schooling law reforms in post-WWII United States," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    15. Kelley Sarussi & Thomas Walstrum, 2019. "Education and the Evolution of Earnings Across Population Groups Since 2000," Profitwise, Federal Reserve Bank of Chicago, issue 5, pages 1-13.
    16. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2016. "Public Provision of Private Goods, Self-Selection, and Income Tax Avoidance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 666-692, October.
    17. Uwe Sunde & Thomas Dohmen & Benjamin Enke & Armin Falkbriq & David Huffman & Gerrit Meyerheim, 2022. "Patience and Comparative Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(5), pages 2806-2840.
    18. Seebacher, Moritz, 2023. "Pathways to progress: The complementarity of bicycles and road infrastructure for girls’ education," Economics of Education Review, Elsevier, vol. 97(C).
    19. Azuara, Oliver, 2011. "Effect of universal health coverage on marriage, cohabitation and labor force participation," MPRA Paper 35074, University Library of Munich, Germany.
    20. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.

    More about this item

    Keywords

    Nepal;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ash:wpaper:46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ashoka University (email available below). General contact details of provider: https://www.ashoka.edu.in .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.