Distributional Effects of Public and Private Education on Social Welfare: The Mediating Role of Human Capital and Moderating Role of Government Subsidies.

Abstract

In this study, with a combination of welfare economics and human capital theory, it is found that the provision of education, be it through the public or the private sector, influences the equity of social welfare and income distribution. The 367 respondents in the study comprising mixed backgrounds of education use a cross-sectional survey to test a mediation-moderation model with the help of Partial Least Squares Structural Equation Modeling (PLS-SEM). The results have shown that education provision is a major issue affecting social welfare in both direct and indirect ways based on accumulation of human capital. Human capital is verified as a partial mediator but government education subsidies enhance a relationship that exists between education provision and human capital. Policy debriefing outcomes imply the significance of policy actions towards assuring a fair skill-making and welfare outcomes, pointing out the inabilities of education systems themselves without the establishment of the supportive systems. These understandings are relevant to the theory because they establish a connection between education provision, human capital and welfare within a cohesive framework and provide benefits in designing an inclusive education policy.