The conventional wisdom views high levels of education as a prerequisite for democracy. This paper shows that existing evidence for this view is based on cross-sectional correlations, which disappear once we look at within-country variation. In other words, there is no evidence that countries that increase their education are more likely to become democratic.
This paper investigates the determinants of political support for the privatization of education in the UK. In pledging support, the electorate is assumed to form opinions about the effects of education policies and reforms and then apply cost-benefit calculations, depending on their circumstances. Based on assumptions about the effects of a reform and the cost-benefit calculus, it is possible to identify which voters would oppose or advocate educational reforms such as greater school competition, ability selection and promotion of private schooling. Support for these reforms is then estimated using the British Educational Panel Survey (1997). The results indicate that political preferences largely reflect the anticipated personal costs and benefits from educational reforms. Those with children are in favour of reforms to raise school competition; those working in the education sector are against such reform. Those with higher anticipated tax liabilities favour privatization and support private schooling. Overall, however, educational reforms toward privatization received only minority support in Britain as of 1997.
We study the evolution of an educational system founded on a hierarchical differentiation between vocational and general education, with vocational playing an inferior role in the society. The dynamics are best summarized by the ratio of the fraction of the population in vocational to that in general education, which we interpret as a measure of the degree of stratification of the society. We show that this ratio first rises and then declines with the level of development, displaying an inverted U-shape which reflects the complex interaction between economic and political forces, including aggregate income growth, wealth inequality and political participation.
We develop a model of human capital formation with endogenous labour supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal progressive schedule of the labour income tax and optimal capital income taxes. Subsidies on education ensure efficiency in human capital accumulation, while taxes on skilled labour help to redistribute income towards the less able. We thus provide a rationale for the widely observed presence of education subsidies. The actually observed tax codes and level of education subsidies suggest that a large part of education subsidies can be justified on these grounds.
A school voucher would decrease property values in neighborhoods with superior public schools and increase property values in neighborhoods with inferior public schools. These potential gains and losses may influence voting on voucher initiatives, particularly for homeowners without school children. This paper examines that possibility, using a survey of potential voters on California's 2000 voucher initiative. We find evidence that homeowners voted to protect their property values. For homeowners without school children, the probability of voting for the voucher was 39 percent if they lived in neighborhoods with superior public schools and 56 percent if they lived in neighborhoods with inferior schools.
Under the majority voting rule, a system of universally available vouchers (UV) is politically less feasible than a system of selective vouchers (SV) confined to families with incomes equal to or less than median voter income. After the introduction of UV, public expenditure on education will have to be shared with previous private school users. Per capita expenditure will then drop and/or tax will increase. Since these events will injure the median voter, he will reject UV. He will be indifferent between the status quo and SV. Indifference will turn into enthusiasm however, if, as can be expected, the new regime (SV) brings effective new competition.
We derive an improved methodology for linking theoretical parameters of a political economy model of school choice to empirical values estimated by regressing local private enrollment shares on mean income, the median-to-mean ratio, religious and ethnic composition, and other variables. This leads us to reject the commonly maintained assumption that a coalition of "ends against the middle" determines local school funding, and to conclude instead that the median-income voter is decisive. It also allows us to estimate the perceived relative efficiency advantage of private schooling, which we find to be about 30% at the margin.
This paper investigates the effects of two specific forms of intervention in the market for education: an ability test for admission to university and a subsidy to tuition fees financed through general taxation. Both these measures enhance equality of opportunity, but their equity and efficiency effects are ambiguous. This ambiguity is reflected in the political economy equilibrium which would emerge as the result of voting on the level of the ability test and of the subsidy.
This article shows that reverse discrimination policies can find a justification purely on efficiency grounds. We study the optimal provision of education when households belong to different groups, differing in the distribution of the potential to benefit from education among individuals, which is private information. The main result is that high-potential individuals from groups with relatively few high-potential individuals should receive more education than otherwise identical individuals from groups with a more favorable distribution of these benefits.
Some public goods are provided entirely with private contributions, others with a mixture of public and private funding, and still others are entirely publicly funded. In order to study this variation, a model of dual provision is developed that endogenizes public and private funding. Households vote over an income tax that finances public supply of the good and on whether to permit private contributions. While permitting private contributions may lead to a reduction in total provision, a majority always favors permitting private contributions. Results are developed for small and large economies, and the relevance of nonexcludability and noncongestion are investigated.
We compare the efficiency and equity effects of three financing systems for higher education: the traditional tax-subsidy system, where education subsidies are financed from general taxation; loan schemes; and a graduate tax. We find that efficiency and equity targets cannot be simultaneously achieved by the traditional tax-subsidy system, and that both loan schemes and a graduate tax fare better. When education outcomes are uncertain, the graduate tax is to be preferred to a pure loan scheme because of the greater insurance provided by the former and because it tends to be preferable to an income contingent loan system.
This paper examines the evolution of inequality in an overlapping generations model where each individual's human capital investment depends on quality of schools. We consider an education regime where the quality of schools is a publicly provided input financed by an income tax. We show that the income gap between the rich and the poor may widen even when the quality of public education is the same across all individuals. Thus, in the short run, public education may not be the great equalizer as intended by its proponents, though it is in the long run. We also show that the effect of taxes on inequality is ambiguous.
Milton Friedman has suggested that the political power of the American Federation of Teachers and the National Education Association (the two major teachers unions) has been instrumental in defeating the adoption of educational vouchers. We test this hypothesis. We find that a campaign contribution to a member of the U.S. House of Representatives by either union reduces the probability that also a Representative will vote for a pro school choice amendment to the "No Child Left Behind Act of 2001." Also a Representative whose district has a large African American population or who is Republican is more likely to vote for vouchers.
Public provision of education has often been perceived as universal and egalitarian, but in reality it is not. Political pressure typically results in incidence bias in favor of the rich. Gradstein argues that the bias in political influence resulting from extreme income inequalities is particularly likely to generate an incidence bias, which we call social exclusion. This may then lead to a feedback mechanism whereby inequality in the incidence of public spending on education breeds higher income inequality, thus generating multiple equilibria: with social exclusion and high inequality; and with social inclusion and relatively low inequality. The author also shows that the latter equilibrium leads to higher long-run growth than the former. An extension of the basic model reveals that spillover effects among members of social groups differentiated by race or ethnicity may reinforce the support for social exclusion. This paper—a product of Public Services, Development Research Group—is part of a larger effort in the group to understand the causes and the consequences of incidence biases in public spending.
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Economic theory advances various arguments in favor of and against privatizing education. In this paper we investigate the extent to which these arguments influence voters' opinions. We analyze two popular referenda in which some 400,000 voters in two Swiss cantons expressed their opinions on the issue of education vouchers and direct subsidies to private schools. We find that successful attempts to move towards a more privatized education system rest mainly on pure income effects, some other socio-economic determinants, ideological convictions, and possibly the perceived quality of the public schools. Peer-group and tax-burden effects, which play a prominent role in the theoretical literature, do not appear to significantly influence voting behavior.
The paper develops a public education scheme that takes uncertainty aspects of private educational investments explicitly into account. A case is made for tuition fees, which depend on expected return on investments in education. The consideration of uncertainty provides a neglected link between educational choice, resource endowment and productivity growth, that may serve to redefine the public role of education financing.
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