A model of vertically differentiated education
AbstractWe analyse the allocation of students who differ in their ability to two school types when there are peer effects (students learn more the better their classmates) and expected income after school depends also on the average productivity of peers. We derive the allocation under free school choice and decentralized determination of the academic level; we show that, compared to the social optimum, the level is suboptimal and to many students attend the better school type. A social planner can improve on the allocation under free school choice by prescribing a higher academic level.
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Bibliographic InfoArticle provided by Springer in its journal Journal of Economics Zeitschrift für Nationalökonomie.
Volume (Year): 69 (1999)
Issue (Month): 1 (February)
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Web page: http://www.springerlink.com/link.asp?id=108909
education; externalities; vertical differentiation; decentralization; D62; I20;
Other versions of this item:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- I20 - Health, Education, and Welfare - - Education - - - General
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