The effect of household income on higher education in Lesotho

Given the small sample size and the mixed order of integration among the variables, the Autoregressive Distributed Lag Error Correction (ARDL-ECM) model is used to examine both short-run and long-run relationships of the effect of household income on higher education in Lesotho in the period of 1993-2018. The model was employed to estimate the relationship between these two variables while also considering the interaction with government expenditure. The findings showed that government expenditure on education does not appear to have a statistically significant impact on tertiary enrolment and that household consumption levels negatively correlate with tertiary enrolment, indicating that higher consumption may divert resources away from education, aligning with the substitution effect described in previous studies. The study suggests that the government should thoroughly review how education spending is allocated across different educational levels to help ensure that funds are effectively used to promote equitable access to education.