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Equity and Resources: An Analysis of Education Finance Systems

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Author Info
Raquel Fernandez
Richard Rogerson

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Abstract

We analyze five education finance systems: local, state, foundation, power equalizing with recapture (PER), and power equalizing without recapture (PEN). In a calibrated model, we find that finance systems have large effects on educational resources and equity. The trade-off between equity and resources, however, is not monotone. Ranking systems by expected utility, we find that PER consistently ranks highest, though it provides fewer resources to education than the foundation and PEN systems and is less equitable than a state system. We prove that for an important subset of preferences, PER will win in majority voting comparisons with the other systems.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 111 (2003)
Issue (Month): 4 (August)
Pages: 858-897
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Handle: RePEc:ucp:jpolec:v:111:y:2003:i:4:p:858-897

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References listed on IDEAS
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  4. Raquel Fernandez & Richard Rogerson, 1995. "Education Finance Reform and Investment in Human Capital: Lessons from California," NBER Working Papers 5369, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October. [Downloadable!] (restricted)
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  8. Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September. [Downloadable!] (restricted)
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  9. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February. [Downloadable!] (restricted)
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  13. Robert Manwaring & Steven Sheffrin, 1997. "Litigation, School Finance Reform, and Aggregate Educational Spending," International Tax and Public Finance, Springer, vol. 4(2), pages 107-127, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Changhui Kang, 2007. "Does Money Matter? The Effect of Private Educational Expenditures on Academic Performance," Departmental Working Papers wp0704, National University of Singapore, Department of Economics. [Downloadable!]
  2. Gradstein, Mark & Justman, Moshe, 2001. "Education, Social Cohesion and Economic Growth," CEPR Discussion Papers 2773, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Catalina Gutiérrez & Ryuichi Tanaka, 2009. "Inequality and education decisions in developing countries," Journal of Economic Inequality, Springer, vol. 7(1), pages 55-81, March. [Downloadable!] (restricted)
  4. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," NBER Working Papers 13236, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Joydeep Roy, 2004. "Impact of School Finance Reform on Resource Equalization and Academic Performance: Evidence from Michigan," Econometric Society 2004 North American Summer Meetings 425, Econometric Society. [Downloadable!]
  6. Raquel Fernandez, 2001. "Sorting, Education and Inequality," NBER Working Papers 8101, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Dennis N. Epple & Maria Marta Ferreyra, 2007. "School Finance Reform: Assessing General Equilibrium Effects," NBER Working Papers 13524, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2003. "A Unified Framework for Estimating Preferences for Schools and Neighborhoods," Working Papers 872, Economic Growth Center, Yale University. [Downloadable!]
  9. Maria Marta Ferreyra, 2007. "Estimating the Effects of Private School Vouchers in Multidistrict Economies," American Economic Review, American Economic Association, vol. 97(3), pages 789-817, June. [Downloadable!]
  10. Claudia Goldin & Lawrence F. Katz, 2003. "The "Virtues" of the Past: Education in the First Hundred Years of the New Republic," NBER Working Papers 9958, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Carlos Maravall Rodriguez, 2005. "Fiscal Federalism With A Single Instrument To Finance Government," Economics Working Papers we052213, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  12. Rainald Borck, 2008. "Central versus local education finance: a political economy approach," International Tax and Public Finance, Springer, vol. 15(3), pages 338-352, June. [Downloadable!] (restricted)
    Other versions:
  13. Rainald Borck & Katharina Wrohlich, 2008. "Preferences for Childcare Policies: Theory and Evidence," Discussion Papers of DIW Berlin 827, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  14. Steve Bradley & Jim Taylor, 2008. "Diversity, choice and the quasi-market: An empirical analysis of secondary education policy in England," Working Papers 005802, Lancaster University Management School, Economics Department. [Downloadable!]
  15. Mohamed Ben Mimoun, 2004. "On the role of inequalities and public education expenditures in human capital investment : a theoretical approach," Cahiers de la Maison des Sciences Economiques bla04094, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  16. Fernández, Raquel, 2001. "Sorting, Education and Inequality," CEPR Discussion Papers 3020, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  17. William Blankenau & Steven Cassou & Beth Ingram, 2007. "Allocating Government Education Expenditures Across K-12 and College Education," Economic Theory, Springer, vol. 31(1), pages 85-112, April. [Downloadable!] (restricted)
  18. Bernarda Zamora, 2007. "A New Discussion Of The Human Capital Theory In The Methodology Of Scientific Research Programmes," Working Papers. Serie AD 2007-26, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  19. Kjetil Bjorvatn & Alexander Cappelen, 2003. "Decentralization and the Fate of Minorities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  20. Nancy Birdsall, 2007. "Income Distribution: Effects on Growth and Development," Working Papers 118, Center for Global Development. [Downloadable!]
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