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Education policy and inequality: A political economy approach

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  • Di Gioacchino, Debora
  • Sabani, Laura

Abstract

Regression results show that more unequal societies tend to spend comparatively more on higher levels of education. In a two-period model with heterogeneous agents, this paper investigates the political determinants of this bias. In the first period, public education is financed by the incumbent government by issuing bonds. Investments in basic and higher education have conflicting effects on future labour income distribution and net returns to these investments depend on the tax and transfers system being selected in the following period through the democratic process. Our idea is that public investment in basic education, by decreasing future labour income inequality, may induce future policy-makers to redistribute resources through financial rents taxation, thus making unfeasible the issuing of debt to finance basic education. This will be the more probable the greater wealth inequality is.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 4 (December)
Pages: 463-478

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Handle: RePEc:eee:poleco:v:25:y:2009:i:4:p:463-478

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Political economy Representative democracies Education Inequality Redistribution;

References

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  8. Harms, Philipp & Zink, Stefan, 2003. "Limits to redistribution in a democracy: a survey," European Journal of Political Economy, Elsevier, vol. 19(4), pages 651-668, November.
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  13. Besley, Timothy & Coate, Stephen, 2008. "Issue Unbundling via Citizens' Initiatives," International Quarterly Journal of Political Science, now publishers, vol. 3(4), pages 379-397, December.
  14. Walde, Klaus, 2000. "Egalitarian and elitist education systems as the basis for international differences in wage inequality," European Journal of Political Economy, Elsevier, vol. 16(3), pages 445-468, September.
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  18. Zhang, Lei, 2008. "Political economy of income distribution dynamics," Journal of Development Economics, Elsevier, vol. 87(1), pages 119-139, August.
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Citations

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Cited by:
  1. Poutvaara, Panu, 2011. "The expansion of higher education and time-consistent taxation," Munich Reprints in Economics 19801, University of Munich, Department of Economics.
  2. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, vol. 28(4), pages 557-573.
  3. Anderberg, Dan, 2013. "Post-compulsory education: Participation and politics," European Journal of Political Economy, Elsevier, vol. 29(C), pages 134-150.
  4. Debora Di Gioacchino & Paola Profeta, 2011. "Lobbying for Education in a Two-sector Model," CESifo Working Paper Series 3446, CESifo Group Munich.
  5. Markussen, Thomas, 2011. "Democracy, redistributive taxation and the private provision of public goods," European Journal of Political Economy, Elsevier, vol. 27(1), pages 201-213, March.
  6. Di Gioacchino, Debora & Sabani, Laura & Tedeschi, Simone, 2014. "Preferences for social protection: Theory and empirics," Economic Modelling, Elsevier, vol. 36(C), pages 629-644.

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