Government Expenditure on Education: How Effective and Efficient is It? | Chapter 4 | Modern Perspectives in Economics, Business and Management Vol. 8

 The goal of this research is to look into and examine the efficiency and efficacy of local government education spending at the district and municipal levels in East Java from 2007 to 2014. Furthermore, the impact of local government spending, household education spending, and the gross regional domestic product (GRDP) on the educational outcome, namely the education index, is examined in this study.

The methodology for measuring the efficiency of local government expenditure on educational results was chosen as Data Envelopment Analysis (DEA). Constant return to scale (CRS) and variable return to scale (VRS) were assumed in the model (VRS). Panel data regression was used to calculate the effectiveness of government spending. The current study employed data from 38 districts and cities in East Java from 2007 to 2014 to support the analysis. The findings revealed that government spending on education is generally wasteful. Government Education Expenditure (PPP) had no significant impact on the educational index, however Household Education Expenditure (PPRT) and GRDP per Capita had a positive significant impact (IP). This suggests that government spending on education is ineffective in raising educational standards.

Author (S) Details

Achmad Solihin
Faculty of Economics and Business, Universitas Airlangga, Indonesia.

Djoko Mursinto
Faculty of Economics and Business, Universitas Airlangga, Indonesia.

Lilik Sugiharti
Faculty of Economics and Business, Universitas Airlangga, Indonesia.

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