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School Fees and Vouchers when Quality of Education Matters

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  • Alessandro Balestrino
  • Lisa Grazzini
  • Annalisa Luporini

Abstract

The aim of this paper is to analyse the role that quantity and quality of education may play in the design of public policies. In our model, education does not generate externalities nor is considered as a merit good, but educated people enjoy a premium on their incomes. Households live in two areas with different socio-economic characteristics. Altruistic parents choose both the amount and the quality of schooling they want for their children. The government is assumed to provide a composite education service which has a quantity as well as a quality dimension, and is financed mainly via taxes on the income of the parents. We investigate the effects on altruistic parents' social welfare of balanced-budget policy reforms aimed at introducing or raising i) school fees, and ii) vouchers meant to compensate the costs of attending high-quality schools. We show that in general school fees improve parents' welfare while vouchers do not. Parents' altruism is not enough to support high levels of quantity and quality of education: it is not necessarily sufficient to induce them to choose full-time education for their children, and is never sufficient for them to support the introduction of the voucher for quality.

Suggested Citation

  • Alessandro Balestrino & Lisa Grazzini & Annalisa Luporini, 2023. "School Fees and Vouchers when Quality of Education Matters," Working Papers - Economics wp2023_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2023_02.rdf
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    References listed on IDEAS

    as
    1. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
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    3. Bourguignon, Francois & Verdier, Thierry, 2000. "Oligarchy, democracy, inequality and growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 285-313, August.
    4. Alessandro Balestrino & Lisa Grazzini & Annalisa Luporini, 2021. "On the political economy of compulsory education," Journal of Economics, Springer, vol. 134(1), pages 1-25, September.
    5. Hanushek, Eric A. & Woessmann, Ludger, 2015. "The Knowledge Capital of Nations: Education and the Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262029170, December.
    6. Pertti Haaparanta & Ravi Kanbur & Tuuli Paukkeri & Jukka Pirttilä & Matti Tuomala, 2022. "Promoting education under distortionary taxation: equality of opportunity versus welfarism," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(2), pages 281-297, June.
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    More about this item

    Keywords

    Education Policy; Redistributive taxation;

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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