This study sets out to evaluate how public educational expenditure affects economic welfare. Specifically, we investigated the effects and the transmission channels of public educational expenditure on economic welfare in 15 Sub Saharan African (SSA) countries from 2000-2017. We sourced data from the World Development Indicators, World Governing Indicators, the Freedom House and Polity IV data bases. We used the Panel Corrected Standard Errors Estimator (PCSE) in a static model framework to evaluate the direct effects of educational expenditure on economic welfare and the causal mediation analysis to assess the channels through which public educational expenditures affect economic welfare. Our results from the PCSE estimator revealed that the square of public educational expenditure, democracy, access to education, quality governance, trade openness and financial development positively and significantly affect economic welfare in SSA countries while educational expenditure has negative and significant direct effects. However, based on the causal mediation analysis, we found out that trade openness, governance, democracy and educational access positively and significantly mediated the negative effects of public educational expenditure on economic welfare in SSA. On the basis, we strongly recommend that governments should increase the sizes of public spending on education, improve on governance, improve on access to education and liberalise their economies.

economic welfare

expenditure

education