Distributional effects of public healthcare and education expenditure: A case of Thailand

Abstract

The policy advocacy of academics and researchers signify the public spending on education and health as the positive externalities and spillover effects in the society. It also promotes that social spending helps reducing income inequality and eventually reduce poverty. This study aims at analyzing the distributional effects of social spending on education and health by examining the pre and post income distribution in Thailand following the quantitative dataset of 2011. It follows calculation of benefit incidences, which is a method of computing distributional effects of public spending, based on different five income groups (poorest, poor, moderate, rich & riches). The study divulges that Thai education system seems to be pro-poor particularly for primary and secondary education whereas healthcare seems pro-rich. It is revealed that benefit of the poorest income group increased from 8.16 per cent to 9.51 per cent while it decreased from 41.48 per cent to 39.86 per cent for the richest group after government expenditure. The increase for poor and decrease for rich in income benefit after public expenditure is treated as positive for the society. The total public expenditure on these two sectors in Thailand denotes the decrease in inequality as the Gini coefficient went down to 0.2818 from 0.3056. The study suggests increasing expenditure for the rural and poor people to minimize the gap. A special stipend is suggested for the rural student to at tertiary level where richest has highest share and there is big gap in at this level. The study also recommends establishing more higher education institutes at the provincial level to benefit the poor and rural people living away from the capital. Study suggests government to impose tax on private healthcare, which is usually availed by affluent people. Likewise, government can spend more money for lower income group. Policy should also formulate to emphasize rural people than urban in order to provide benefit to the poor.