Education demand elasticity in Ghana: Evidence from household level data

Abstract

Education remains a key factor in human capital accumulation development. Owing to its impact on economic growth and individual welfare, government and household education finance have gained prominence in developing countries. This study seeks to explain the sensitivity of household education demand based on both school type and level owing to changes in household income and price of education, incorporating selected demographic factors in the analysis. To perform this demand analysis, the author adopted the extended version of the Quadratic Almost Ideal Demand System (QUIAIDS) and the 2016/17 Ghana Living Standard Survey 7. The result shows that education at each level is a normal good; the demand of which increases owing to a one percent increase in household education budget (income). Also, households are income elastic to demand general pre-tertiary education but price inelastic at each level of education.  The results further show that public education has higher income elasticities than private education. The author also find that even though both school types are price inelastic, the quantity demanded of private education is more sensitive to change in education cost that public- education at all levels.