Factors Governing Enrollment and Public Expenditure on Education in Ethiopia

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Addis Ababa University


An effort is made to identify and determine the effects of the economic and demographic factors that influence the rapid growth of the educational system in Ethiopia. In doing this, the paper reviews the theoretical and empirical arguments for the rapid investment on education in the world. The analytical model constructed by Schultz (1985) to address the same problem is used. The model enables us to determine the effect of the factors identified to influence the growth of the system, in production-demand framework as constraints and conditions affecting the costs of, and demands for educational services. In the empirical estimation per capita income per adult, relative price of teachers, relative size of school age population and proportion of urban population are identified as the major factors governing the growth of the system. It is found out that the moderately growing income per adult, the decreasing relative price of teachers and the constantly growing urbanization significantly contributed to the growth of public expenditure on education. The rapidly growing school-age population squeezed and constrained the growth of public expenditure. On the other hand, from the components underlying this expenditure per school child, it is seen that the rapidly increasing enrolment with decreasing expenditure per student was made possible by; the relative substitution of physical resources by human resources and the absolute depreciation of physical resource intensity per student. In addition to these, the effect of economic and demographic factors on expenditure per school child by school levels and on the enrolment rates of males and females are also discussed. Finally, the implications of these findings on the existing education system of the country are also analyzed.



Human Resource, Human Resource Economiics