Another observation is that at the median and lower tail of the private educational expenditure distribution, variables such as income, household head schooling and housing facilities are important to determine the _MM•FWPv._ At the upper tail of the distribution, household per capita income is the only relevant variable that determines _MA'IWPv_ (table 9 in appendix 2).

**Table 10. Effect" of public schools supply on household education spending through out the conditional'**<sup>**5**</sup>

|||**ex**|**penditure distr**|**ibution**||
|---|---|---|---|---|---|
||**Quantile**|**Quantile**|**Quantile**|**Quantile**|**Quantile**|
||**0.1**|**0.25**|**0.5**|**0.75**|**0.9**|
|**MMWPv**|1101.48|2843.56|5781|16291.04|39533.6|
|MMWPu|16.52|252.12|1636.2|6241.2|12897.04|
|Effect|1084.96|2591.44|4144.84|10049.88|26636.56|

_Source:_ Own calculation based on ENIGH 96 1/ Annual 1996 pesos It is seen from the above analysis and from table 10 that those households with a high level of educational expenditures receive the largest subsidy from public educational services. Given that there is a strong positive relationship between educational expenditures and per capita household income, a reasonable conclusion might be that the government should charge a fee to those in the upper tail of the income distribution especially considering that the wealthy individuals have both a high valuation for quality of schooling and are able to pay for the educational service.

# _4 FACTORS THATDETERMINE UPPER SECONDARYENROLLMENT_

Next, the factors that determine enrollment in upper secondary school level are analyzed. _1_<sup>_6_</sup> This is done in order to assess which household and government variables affect enrollment and retention at upper secondary level.

For purpose of the following analysis, the probability being modeled is enrollment in upper secondary school for individuals age 15 to 19, the official school age for this level of education. The child and household level variables are: (a) demographic variables, including the number of babies, children, and adults, as well as the square of the number of babies, children, and adults, the age of the household head and its square, and the household head gender; (b) the age and age squared of the child; (c) education variables: the educational level of the head in categories (some primary school, primary school completed, lower secondary complete, upper secondary complete and higher); and (c) occupation variables: the household head's industrial sector of employment and position occupied, as well as an indicator for the formal sector. The government variables are measured at state level and include: federal expenditures in 1996 pesos per student at both the basic and upper secondary school level and the number of teachers per thousand individuals in age range 15-19.

Table 1 in appendix 4 presents the marginal effects as estimated from the probits for ,nrollment at a national level as well as the impact of the exogenous variables across the income distribution and through urban and rural areas. This is of interest in the exam of the impact of government subsidies and schooling variables on the poor. If government concerns for equity are translated into higher school enrollment, one might expect to see a stronger impact of government transfers and a supply of educational services for the poorer income groups and rural areas, as opposed to the relatively wealthy groups. Table 1 in appendix 4 also shows the probit regressions results run separately on for the 'Poor' and "Wealthy" income groups, which in turn are formed by the bottom 40 % and the top 40 % of the income distribution.

> 15 Conditional to per capita income, years of schooling of head, area _(rural),_ age, age squared, gender, number of rooms, type of floor, sewage, number of children, trigger variable.

> 6 For a review of factors that affect basic education enrollment, see World Bank (1999). Government Programs and Poverty in Mexico, Green Cover.

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