Free higher education and equity

Abstract

Higher education has an increasing importance in shaping countries standardof living and socio - economic conditions of its citizens. Governmentsaround the world contribute to its financing in the belief that educationis a merit good, provides external benefits and help to achieve a moreegalitarian society. However, the presumption that a relevant amount ofstate aid or even gratuity could not be enough to reach the equality ofeducational opportunities gave rise to several studies aimed at identifyingthe true beneficiary of the subsidy hidden in public funding. In order toexplore the income distribution effects of state aid this paper groupshouseholds according to income levels, estimates the benefits that receiveeach of them measured as free enrollment, on the one hand, and contributionsto financing through the tax system on the other, and thus obtains the nettransfers. Its findings suggest that in Argentina higher education seems tohave both a moderate progressive redistribution effect from the rich andregressive from the poor towards the middle class. A behaviour that isexplained because tax system is progressive, poor have access barriers,private institutions offer good quality options to wealthy citizens and alarge fraction of people belonging to middle class attend the public highereducation sector.