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Available from: Laura De Pablos Escobar, Oct 10, 2015
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    ABSTRACT: 2 Research has shown that education in Mexico has played a crucial role in the process of earnings formation and that returns to education have increased only in the higher levels of education and in the upper tail of the conditional earnings distribution. This paper examines the public educational expenditure patterns in the face of possible further increases in earnings inequality. Several benefit-incidence analysis are carried out bringing together two important and unique sources of information unit cost per student by state and by educational level as well as data from the households income and expenditures surveys. Some of the most interesting results are: i) at national level the poorest income groups receive the bulk of primary education subsidy (federal plus state expenditures), while at higher levels of education they receive progressively smaller subsidies. ii) Government’s educational expenditure pattern changes across regions. That is, in the North Region primary education is near equality line and regressive for other levels of instruction. In the Central Region, primary schooling lies above the equality line while lower secondary is very close to it. Upper secondary and tertiary instruction benefit the richest income deciles. In the South Region, basic education is very progressive, upper secondary is at the equality line and tertiary education level lies below the 45-degree line. In Mexico City, the cumulative distribution at all levels of education