Income Elasticity of Professional Education Expenditure Across Socio-Economic Groups in India

Abstract

Purpose : Enrolment in professional education in India is highly dependent on the household's financial and economic capacity, which raises concerns about educational inequality. This study examined the relationship between household income and private expenditure on professional education in India, focusing on how expenditure responsiveness varied across income groups, while controlling for socio-economic characteristics.

Methodology : The study used nationally representative micro-level data from the 75th round of the National Sample Survey. Households were divided into five income quintiles, and annual consumption expenditure was used as a proxy for household income. A log-log regression model, including interaction terms, was estimated to analyze the income elasticity of professional education expenditure across income quintiles.

Findings : The study found a clear monotonic increase in income elasticity across income quintiles, with negligible responsiveness among poor households and higher responsiveness among richer households. Thus, professional education is found to be superior to standard necessities but less volatile than pure luxury goods in India, behaving as a quasi-luxury good for upper-income households.

Practical Implications : The findings highlighted the need for targeted policy interventions, including strengthening public provision of professional education, expanding financial support mechanisms, and regulating private institutional costs, to ensure more equitable access for all socio-economic groups.

Originality : Unlike prior studies that focused mainly on aggregate levels and were largely based on general education, this study estimated subgroup-specific income elasticities, particularly for professional education.