Willingness to Pay for Social Services in Developing Countries: The Case of Education in Ethiopia
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Date
1999-06
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A.A.U
Abstract
It has long been argued that developing countries has to develop their human’ capital to' day '
down the necessary base fore long term economic growth. One of the most important ways
through which improvement in human capital can be brought about is by extensively investing
on the formal education. Ethiopia, as one of the least developed countries, has been lagging
behind in its human capital development. Enrollment has been among the lowest in the word.
On the other hand due to the lack of public resources to finance the expansion of education
there is an increasing needs for a policy of charging user fees at secondary and higher
education. The purpose of this study is to investigate whether households are willing to pay for
education particularly in the rural areas, by using the 1994195 Ethiopian rural household
survey. I estimated the logistic demand function for education and computed the price
elasticity and willingness to pay for reduction in travel time to school. The major findings of this
study are school prices, number of siblings, distance to school and the ratio of student to
classroom are found to be the most important determinants of enrollment in rural Ethiopia. In
addition, rural households are found not willing to pay for reduction in travel time to school.
This implies, therefore, that the policy of charging user fees to cover the cost of providing
School services are not feasible in rural Ethiopia.
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Keywords
Developing Countries, Education in Ethiopia, Pay for Social Services