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Central versus Local Education Finance: A Political Economy Approach

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Author Info
Rainald Borck

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Abstract

This paper models voters' preferences over central versus local education policies when there are private alternatives. Education is financed by income taxes and individuals are mobile between communities. Public education levels are chosen by majority vote. Contrary to conventional wisdom, centralisation may benefit the rich and poor, while the middle class prefer decentralised education. The model is also extended to include peer effects. Peer effects increase the support for central school finance, even in the community with good public schools.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 565.

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Length: 19 p.
Date of creation: 2006
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Publication status: Published in: International Tax and Public Finance 15 (2008), No. 3, 338-352
Handle: RePEc:diw:diwwpp:dp565

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Related research
Keywords: Education; centralisation; private school; majority voting;

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Find related papers by JEL classification:
I22 - Health, Education, and Welfare - - Education - - - Educational Finance
H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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References listed on IDEAS
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.:
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  2. Fernández, Raquel & Rogerson, Richard, 1999. "Education finance reform and investment in human capital: lessons from California," Journal of Public Economics, Elsevier, vol. 74(3), pages 327-350, December. [Downloadable!] (restricted)
    Other versions:
  3. Hendrik Jürges & Kerstin Schneider & Felix Büchel, 2005. "The Effect Of Central Exit Examinations On Student Achievement: Quasi-Experimental Evidence From TIMSS Germany," Journal of the European Economic Association, MIT Press, vol. 3(5), pages 1134-1155, 09. [Downloadable!] (restricted)
    Other versions:
  4. JOUVET, Pierre-AndrŽ & MICHEL, Philippe & PESTIAU, Pierre, 2004. "Public and private environmental spending : a political economy approach," CORE Discussion Papers 2004068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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  5. Raquel Fernandez & Richard Rogerson, 2003. "Equity and Resources: An Analysis of Education Finance Systems," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 858-897, August. [Downloadable!] (restricted)
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  6. Hansen, Nico A. & Kessler, Anke S., 2001. "(Non-)Existence of Equilibria in Multicommunity Models," Journal of Urban Economics, Elsevier, vol. 50(3), pages 418-435, November. [Downloadable!] (restricted)
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  13. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November. [Downloadable!] (restricted)
  14. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March. [Downloadable!] (restricted)
  15. Thomas J. Nechyba, 2001. "Centralization, Fiscal Federalism and Private School Attendance," NBER Working Papers 8355, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Stiglitz, J. E., 1974. "The demand for education in public and private school systems," Journal of Public Economics, Elsevier, vol. 3(4), pages 349-385, November. [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. Marcelin Joanis, 2009. "Sharing the Blame? Local Electoral Accountability and Centralized School Finance in California," Cahiers de recherche 09-21, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke. [Downloadable!]
  2. Ulrich Oberndorfer & Viktor Steiner, 2006. "Intergenerational Conflict, Partisan Politics, and Public Higher Education Spending: Evidence from the German States," IZA Discussion Papers 2417, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Ulrich Oberndorfer & Viktor Steiner, 2006. "Generationen- oder Parteienkonflikt?: Eine empirische Analyse der deutschen Hochschulausgaben," Discussion Papers of DIW Berlin 603, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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