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.