incomes (Table 4, right panel). Given the low incomes of the poor, small monetary transfers can make an important difference in living standards. Conversely, substantial changes in the relative incomes of the rich would require comparatively larger transfers. What stands out in this respect is that public monetary transfers mainly have an impact on the relative household incomes of the very rich and very poor. Broadly speaking, gross income of the richest quintile is boosted by 11.1 percent largely as a result of pension transfers. Meanwhile, gross incomes of the poorest quintiles rise by 12.0 percent mainly because of conditional cash transfers. The income boost from public monetary transfers on the intermediary quintiles is less pronounced at about 3.5-6.0 percent.

# **4.2 Public Non-Monetary Spending**

41. **Social public spending on education, health, early childhood and other public services have important benefits for poor and non-poor households.** The monetary value of these benefits can be imputed and the incidence across the income distribution analyzed. These benefits will not be captured in the official summary statistic of the Gini coefficient, which measures the distribution of post-tax incomes, which includes public monetary transfers and direct/indirect taxes, but excludes non-monetary transfers.

# **_Education_**

42. **Public spending on education is progressive and the benefit is substantial relative to the incomes of poor households.** The poorest quintile receives 26.8 percent of the subsidy, which arises because the cost of education is covered by the government rather than paid by the households. The richest quintile, in comparison, receives 11.8 percent of the total subsidy. Although these benefits are non-monetary, it is possible to estimate the hypothetical Gini coefficient that would arise if they were monetary. Such estimations suggest that the equivalent subsidy, if converted to cash, would lower the Gini coefficient by 3.8 points. When compared to household incomes, the education subsidy is equivalent to 66.6 percent of incomes of the poorest quintile, while the subsidy corresponds to only 1.0 percent of the incomes of the richest quintile.

**Table** **<u>5.  Incidence of Education Programs (non-monetary)</u>**

|||Distrib|ution of S|ubsidy||Relati|ve increa|se in hou|sehold i|ncome|
|---|---|---|---|---|---|---|---|---|---|---|
||Poor|est ←|Quintile|→ Ric|hest|Poor|est ←|Quintile|→ Ri|chest|
||1.|2.|3.|4.|5.|1.|2.|3.|4.|5.|
|Preschool|35.3|28.0|22.2|11.7|2.8|5.5|1.7|0.8|0.2|0.0|
|Primary|34.8|28.4|19.8|12.4|4.5|36.1|11.2|4.5|1.6|0.2|
|Secondary|24.7|24.3|23.2|17.7|10.0|23.5|8.8|4.9|2.1|0.3|
|Technical|9.6|16.5|22.1|33.1|18.6|0.2|0.1|0.1|0.1|0.0|
|Technological|11.3|5.3|27.3|33.2|22.9|0.2|0.0|0.1|0.1|0.0|
|University|3.7|6.7|15.4|28.4|45.8|1.1|0.8|1.0|1.1|0.5|
|Total education|26.8|23.9|20.8|16.7|11.8|66.6|22.7|11.4|5.3|1.0|

Source: Nuñez (2009) using 2008 ECV data.

43. **Pre-school and primary education expenditure is particularly well targeted to the poor, while the rich benefit from higher level education spending.** About 35 percent of the education subsidy in pre-school and primary education is received by the poorest quintile compared to rates of less than 5 percent for the richest quintile. Conversely, almost half (45.8 16