The Relative Progressivity of Social Services in Ecuador

Abstract

This article examines the incidence of public subsidies to health and education services in Ecuador. In Ecuador, health and education services are the only public expenditures that consciously attempt to redistribute welfare to the poor. The methods combine demand estimates from the willingness-to-pay literature with welfare dominance tests, allowing a comparison of the standard benefit incidence analysis with the more sophisticated demand estimates. The results give a clear progressivity ordering for the public services examined: primary school subsidies are the most progressive, followed by health consultations for children, health consultations for adults and secondary education (which are statistically indistinguishable), and subsidies for tertiary education. Of these, only the first two have a significant impact on the distribution of per capita expenditure, inclusive of benefits. These results are remarkably consistent across the methods used.