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Inequality and Education Funding: Theory and Evidence from the U.S. School Districts

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  • Calin Arcalean

    ()
    (ESADE Ramon Llull University)

  • Ioana Schiopu

    ()
    (ESADE Ramon Llull University)

Abstract

We investigate the relationship between inequality and education funding in a model of probabilistic voting over public education spending where the private option is available. A change in inequality can have opposite effects at different income levels: higher inequality decreases public spending per student and increases enrollment in public schools in poor economies, while the opposite holds in the rich ones. A change in the tax base can also have non-monotonic e¤ects. We also study the implications of different voting participation across income groups. The predictions of the model are supported by U.S. school district-level data.

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File URL: http://www.iub.edu/~caepr/RePEc/PDF/2010/CAEPR2010-009.pdf
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Bibliographic Info

Paper provided by Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington in its series Caepr Working Papers with number 2010-009.

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Length: 37 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:inu:caeprp:2010-009

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  1. David de la Croix & Matthias Doepke, 2007. "To Segregate or to Integrate: Education Politics and Democracy," NBER Working Papers 13319, National Bureau of Economic Research, Inc.
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Cited by:
  1. Paololo Melindi Ghidi, 2012. "Income Inequality, School Choice and the Endogenous Gentrification of US Cities," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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