On the efficiency and equity effects of public sector investment in education in Mauritius

This paper addresses the efficiency and equity impacts of public sector investment in education in Mauritius from 1970-1999. In particular, an investigation is carried out to assess whether such investment did contribute first to greater efficiency of the workforce through higher economic growth, and, second, to a more equitable income distribution through the Gini coefficient. Our findings indicate that while public educational expenditure has led to greater efficiency through higher per capita output, its distributional effects are rather complex. The latter effects are tracked through two channels: in the direct causal sense, they are found to worsen inequality, whereas in the indirect or externality sense, they tend to reduce income inequality. However, the overall effect of such expenditure on equity is found to depend much on labour productivity.