Regional Disparities in Demand for Education: A Microeconometric Analysis for Pakistan

Abstract

This study identifies the determinants of household expenditures on education in four provinces of Pakistan. The household survey data are used to identify the factors that affect household’s decision to spend on education. Lognormal hurdle model is employed which suggests that household income, gender and age of household head, awareness about education, school going children and rural urban residence affect household expenditures on education. Household expenditures on education are income inelastic implying that households consider education as an importance and necessary budget item. This elasticity is different in magnitude for Punjab, Sindh, KPK and Balochistan. The concavity of relationship between household expenditures and age of household head is evident. Female heads spend more on education than their male counterpart. Rural households invest less than urban households in education. Moreover, educational awareness, number of school going children also have positive effect on household expenditures on education.