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Population ageing, inequality and the political economy of public education

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  • Francisco Martínez-Mora

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Abstract

Population ageing has triggered concerns about the sustainability of public systems of education. The empirical evidence is still inconclusive, whereas some theoretical results present a somewhat optimistic view (Gradstein and Kaganovich, 2004; Levy, 2005). The present note re-examines the political economy of public education in an ageing society, using the classical median voter model. The normative analysis shows that elderly households introduce distortions that render political outcomes inefficient except in rare circumstances. It is then explained that the interplay among the political and financial consequences of ageing gives rise to a non-linear, and possibly non-monotonic (inverted-U shaped) relationship between spending per pupil and the share of childless households in the population. Income inequality is shown to play a crucial role of in the process, revealing that ageing has a stronger tendency towards underprovision in economies with high inequality. The implications for the empirical literature are discussed.

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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 09/3.

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Date of creation: Jan 2009
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Handle: RePEc:lec:leecon:09/3

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Keywords: population ageing; income inequality; median voter model; public education;

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  1. Miller, Cynthia, 1996. "Demographics and spending for public education: a test of interest group influence," Economics of Education Review, Elsevier, vol. 15(2), pages 175-185, April.
  2. Gianni de Fraja, 2002. "The Design of Optimal Education Policies," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 437-466.
  3. Gradstein, Mark & Kaganovich, Michael, 2004. "Aging population and education finance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2469-2485, December.
  4. Ueli Grob & Stefan C. Wolter, 2006. "Demographic Change and Public Education Spending a Conflict between Young and Old?," Economics of Education Working Paper Series 0008, University of Zurich, Institute for Strategy and Business Economics (ISU).
  5. Gilat Levy, 2005. "The Politics of Public Provision of Education," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1507-1534, November.
  6. Francisco Martínez Mora, 2009. "Population Ageing, Inequality and the Political Economy of Public Education," Working Papers 2009-03, FEDEA.
  7. Harris, Amy Rehder & Evans, William N. & Schwab, Robert M., 2001. "Education spending in an aging America," Journal of Public Economics, Elsevier, vol. 81(3), pages 449-472, September.
  8. Boldrin, Michele & Montes, Ana, 2002. "The Intergenerational State: Education and Pensions," CEPR Discussion Papers 3275, C.E.P.R. Discussion Papers.
  9. Martinez-Mora, Francisco, 2006. "The existence of non-elite private schools," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1505-1518, September.
  10. James M. Poterba, 1996. "Demographic Structure and the Political Economy of Public Education," NBER Working Papers 5677, National Bureau of Economic Research, Inc.
  11. Ed Baldson & Eric Brunner, 2003. "Intergenerational Conflict and the Political Economy of School Spending," Working papers 2003-24, University of Connecticut, Department of Economics.
  12. 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.
  13. de Bartolome, Charles A. M. & Ross, Stephen L., 2004. "Who's in charge of the central city? The conflict between efficiency and equity in the design of a metropolitan area," Journal of Urban Economics, Elsevier, vol. 56(3), pages 458-483, November.
  14. 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.
  15. Ladd, Helen F. & Murray, Sheila E., 2001. "Intergenerational conflict reconsidered: county demographic structure and the demand for public education," Economics of Education Review, Elsevier, vol. 20(4), pages 343-357, August.
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Cited by:
  1. Francisco Martínez Mora, 2009. "Population Ageing, Inequality and the Political Economy of Public Education," Working Papers 2009-03, FEDEA.

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