The impact of educational expenditure on individual child poverty and intra-household inequality in Argentina

Traditional fiscal incidence analysis relies on the unitary household framework as the underlying model of household behavior to measure poverty and inequality at the household level. However, recent evidence shows that neglecting intra-household allocation of resources may generate biases in poverty and inequality measures. We propose a fiscal incidence analysis within a collective household framework that accounts for intra-household inequality in re- source allocation to compute the distributive impacts of taxation or public spending. We first identify the rule governing the allocation of resources within the family using a structural theory-based approach applied to the 2017-2018 National Household Expenditure Survey (ENGH) of Argentina. We then compute per student implicit subsidies by educational level, jurisdiction and type of institution using the cost of provision method to construct ex-post incomes. In the case of the unitary approach the amount of the subsidy is added to family income, while under the collective approach the transfer is allocated inside the family. We then assess the distributive impacts of education subsidies under the unitary and collective model. The main contribution of this work is the implementation of fiscal incidence analysis within a collective approach, providing evidence of the potential biases that may arise when computing distributive impacts within the unitary approach. In the Argentina case, neglecting how education subsidies are allocated within the family underestimates the impact of child poverty and intra-household inequality.