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The purpose of this paper is to examine the incidence of public education subsidies in Ghana. Since the late 1990s, Ghana’s government has increasingly recognized human capital as key to alleviating poverty and income inequality, causing dramatic increases of government expenditures to the education sector. At the same time user fees have been introduced in higher education while basic education is being made progressively free. The question then is, whether these spending increases have been effective in reaching the poor and to what extent? What factors influence the poor’s participation in the public school system?

The authors address the key issues by employing both the standard benefit incidence methods and the willingness-to-pay method.

The results give a clear evidence of progressivity with consistent ordering: pre-schooling and primary schooling are the most progressive, followed by secondary, and then tertiary. Own price and income elasticities are higher for private schools than public schools and for secondary than basic schools.

Given the liquidity constraints African governments face yet there is the need to improve the human capacity of the countries, this study offers solution to how to optimally allocate the educational budget.

The use of policy simulations to ascertain the incidence of public spending on education is innovative as far as previous studies in Africa is concerned.