Education Vouchers: Means Testing Versus Uniformity
AbstractThis paper compares a uniform education voucher system with means-tested scheme in which the voucher is subject to a taper or withdrawal rate as parental gross income increases. Parents are assumed to maximise a utility function which includes their consumption, leisure and the human capital of children. The human capital production function has inputs consisting of parental human capital and expenditure on education. The government faces a budget constraint such that the voucher and a social dividend are financed from a proportional income tax. Alternative combinations of voucher and tax and transfer schemes are evaluated using a social welfare function defined in terms of the utility of parents. It is found that for all combinations of policy variables, a uniform voucher turns out to be optimal. However, if a binding constraint is placed on the maximum tax rate, means-testing, with a low taper, is found to be optimal.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 978.
Length: 34 pages
Date of creation: 2006
Date of revision:
Contact details of provider:
Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-EDU-2007-01-14 (Education)
- NEP-UPT-2007-01-14 (Utility Models & Prospect Theory)
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.:
- Beckerman, W, 1979. "The Impact of Income Maintenance Payments on Poverty in Britain, 1975," Economic Journal, Royal Economic Society, vol. 89(354), pages 261-79, June.
- Bearse, P. & Glomm, G. & Ravikumar, B., 1999.
"On the Political Economy of Means-Tested Education Vouchers,"
9904, Michigan State - Econometrics and Economic Theory.
- Bearse, Peter & Glomm, Gerhard & Ravikumar, B., 2000. "On the political economy of means-tested education vouchers," European Economic Review, Elsevier, vol. 44(4-6), pages 904-915, May.
- Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
- repec:cup:macdyn:v:8:y:2004:i:2:p:226-49 is not listed on IDEAS
- Caucutt, Elizabeth M., 2004. "Evolution Of The Income Distribution And Education Vouchers," Macroeconomic Dynamics, Cambridge University Press, vol. 8(02), pages 226-249, April.
- Buly A. Cardak, 2004.
"Education choice, neoclassical growth, and class structure,"
Oxford Economic Papers,
Oxford University Press, vol. 56(4), pages 643-666, October.
- Buly A Cardak, 2001. "Education Choice, Neoclassical Growth and Class Structure," Working Papers 2001.07, School of Economics, La Trobe University.
- Mitchell, Deborah & Harding, Ann & Gruen, Fred, 1994. "Targeting Welfare," The Economic Record, The Economic Society of Australia, vol. 70(210), pages 315-40, September.
- repec:ltr:wpaper:2003.01 is not listed on IDEAS
- Cardak, Buly A, 1999. "Heterogeneous Preferences, Education Expenditures and Income Distribution," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 63-76, March.
- Helen F. Ladd, 2002. "School Vouchers: A Critical View," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 3-24, Fall.
- West, Edwin G, 1997. "Education Vouchers in Principle and Practice: A Survey," World Bank Research Observer, World Bank Group, vol. 12(1), pages 83-103, February.
- Buly A Cardak & Phillip Hone, 2003.
"Government Subsidies for Private Community Services: The Case of School Education,"
2003.01, School of Economics, La Trobe University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marisa Cerantola).
If references are entirely missing, you can add them using this form.