## _INTRODUCTION_

Standard benefit-incidence analysis assumes that the subsidy and the quality of educational services are the same for all income deciles. This is a strong assumption that has the tendency to minimize the distributional inequity within educational levels. This paper uses a new approach that prevents this drawback. The marginal willingness to pay analysis measures the government's provision for public schools effect on the educational spending behavior of an average household. What would an average household with a given set of characteristics be willing to spend on an individual child, if subsidized public education facilities were not available? What would the household have "saved" by sending the child to public schools instead of private schools? How large are these "savings" for various income groups?

In addition, this paper investigates the link between the government's educational policy and the household's decision-making with regards to its educational expenditure and schooling enrollment. Consequently, this paper focuses on answering the following questions: Which are the determinants for enrollment by income groups and location? How do individuals' educational expenditures affect enrollment patterns?

The study is structured as follows: Section 1 provides a brief description of the data. Section 2 examines private expenditures on education. Section 3 studies the determinants of upper secondary enrollment. Section 4 analyses the marginal willingness to pay for educational services. Section _5_ presents the concluding remarks.

## **_1 THE_** _DA TA_

This paper uses the data from the National Household Income and Expenditures Survey (ENIGH) for 1996. The ENIGH is collected by the _Instituto Nacional de Estadistica, Geografia e Informdtica_ (INEGI). This survey is available for 1984, 1989, 1992, 1994 and 19963. Each survey is representative at national level, urban and rural areas. For 1996, the ENIGH is also representative for the states of Mexico, Campeche, Coahuila, Guanajuato, Hidalgo, Jalisco, Oaxaca and Tabasco.

The survey design was stratified, multistage and clustered. The final sampling unit is the household and all the members within the household who were interviewed.<sup>4</sup> In each stage, the selection probability was proportional to the size of the sampling unit. Then, it is necessary to use the weighs<sup>5</sup> in order to get suitable estimators. The available information can be grouped in three categories:

- Income and consumption: the survey has monetary, no monetary and financial items.

- Individual characteristics: social and demographic, i.e., age, school attendance, level of

- schooling, position at work, economic sector, etc.

# * Household characteristics.

In addition, data from the Direccion General de Planeacion, Programacion y Presupuesto (DGPPyP, Ministry of Education) regarding educational government expenditures (Federal plus state) assigned to the different levels of schooling for each state is used in order to calculate the unit costs.

- 3The sample in a given year is independent from another.

4The sample size for 1996 is as follows: households 14,042 and individuals 64,3 59. The weights should be calculated according to the survey design and corresponds to the inverse ofthe probability inclusion. 2