The roles of education in expenditure inequality in Bhutan: an analysis in an urban–rural context

Based on the 2007 and 2012 Bhutan living standard survey, this study analyzes the roles of education in expenditure inequality in Bhutan in an urban–rural context. Expenditure inequality is high among SAARC countries. Since urban–rural disparity is not large, much of expenditure inequality is due to inequalities within urban and rural areas, particularly within urban areas. Unless inequalities within urban and rural areas are reduced, therefore, overall expenditure inequality would not decrease. The expansion of higher education seems to have increased expenditure inequality among households with higher education, particularly in urban areas. Together with a rise in expenditure disparity among educational groups, this has raised overall expenditure inequality. In rural areas, the government needs to promote basic education, while developing basic infrastructures and creating urban opportunities to mitigate rural–urban migration. In urban areas, the government needs to strengthen industrial infrastructure and promote labor-intensive manufacturing activities to generate employment opportunities.