What's the Relationship Between Inequities in Education Costs and Housing Costs? Households in Three Liberal Welfare Regimes Compared

ABSTRACT Both housing and education are key policy concerns. However, the effects of policies in these areas are seldom examined together. This paper examines expenditure on housing and on children's education in three countries with ‘liberal’ welfare regimes: Australia, the UK and Ireland. We use cross‐sectional household budget survey data for the three countries, supplemented by cross‐sectional analysis of the Household, Income and Labour Dynamics Australia (HILDA) data to compare housing stress (low‐income households spending more than 30% of their incomes on housing), and spending on schooling and outside school activities among households with school‐aged children. Expenditure on schooling is considerably higher and more strongly associated with household income in Australia than in the UK or Ireland, while the relationship between household income and expenditure on outside school activities is strongest in Ireland. Overall, however, we only find a weak association between housing costs and expenditure on schooling or outside school activities. Housing stress is found to be weakly negatively associated with expenditure on schooling in household budget survey data for Australia among households with low, but not the lowest, incomes. No such association is found for Ireland or the UK, or in any of the three countries with respect to expenditure on outside‐school activities. Nor is this finding replicated in the HILDA data. While measurement issues may at least partially explain this finding, it may also suggest that the problem of inequality in household investment in these items needs to be considered in the context of inequality in total household incomes, and in the context of policy that subsidises school costs. This finding may be particularly relevant to Australia in the case of schooling, where both average expenditure and inequality in expenditure on schooling has ballooned since the turn of the century.