RESEARCH UNDERPINNING THE GRADE MODEL
A model of the impact of government revenue and quality of governance on schooling
Highlights
As government revenue increases, school attendance increase.
The magnitude of this influence is mediated significantly by a country’s quality of governance.
This model offers the ability to demonstrate the impact of a change in government revenue and/or governance on school attendance.
Significance of the Study
The results suggest a strong effect over time: as government revenue increases, school attendance rates increase, and the magnitude of this influence is mediated significantly by a country’s quality of governance.
This model offers the ability to demonstrate the impact of increases and decreases in government revenue in an individual country while accounting for the impact of revenue on governance and the impact of both revenue and governance on school attendance.
Research Approach
There is a clear positive relationship between the measures of school attendance and the log of government revenue per capita. The upper bound of 100% is very clear, and thus, a linear relationship between these two would not be sensible as an estimation strategy.
Therefore, we use the logistic function and the governance indicators to modify the shape of the logistic curve for each country. Overall, all the models for primary, lower and upper secondary education work well and have a high explanatory power.
Study Results
To understand the importance of governance and government revenue, we conducted a simple set of experiments. We set all governance indicators to −1, which is generally a poor level of governance and calculate the long-run relationship between revenue and education. We then reset all governance indicators to zero, the midpoint of the range, and then set all governance indicators to +1. The graphs for this experiment for upper secondary education for revenue between 40–100 in real US$ at 2015 prices are shown.
Recommendations
We found that increased government revenue was associated with increased schooling, and the magnitude of this influence was mediated significantly by a country’s quality of governance. This model offers the ability to predict the impact of increases and decreases in revenue in an individual country while accounting for governance and the long-run effect of revenue on governance. The online visualisation based on this model provides realistic predictions of the number of extra children attending school if governments have additional revenue.