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Education policy and inequality: A political economy approach

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  • Di Gioacchino, Debora
  • Sabani, Laura

Abstract

Regression results show that more unequal societies tend to spend comparatively more on higher levels of education. In a two-period model with heterogeneous agents, this paper investigates the political determinants of this bias. In the first period, public education is financed by the incumbent government by issuing bonds. Investments in basic and higher education have conflicting effects on future labour income distribution and net returns to these investments depend on the tax and transfers system being selected in the following period through the democratic process. Our idea is that public investment in basic education, by decreasing future labour income inequality, may induce future policy-makers to redistribute resources through financial rents taxation, thus making unfeasible the issuing of debt to finance basic education. This will be the more probable the greater wealth inequality is.

Suggested Citation

  • Di Gioacchino, Debora & Sabani, Laura, 2009. "Education policy and inequality: A political economy approach," European Journal of Political Economy, Elsevier, vol. 25(4), pages 463-478, December.
  • Handle: RePEc:eee:poleco:v:25:y:2009:i:4:p:463-478
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    Citations

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    Cited by:

    1. Debora Di Gioacchino & Paola Profeta, 2014. "Lobbying for Education in a Two-Sector Model," Economics and Politics, Wiley Blackwell, vol. 26(2), pages 212-236, July.
    2. Paolo Melindi-Ghidi, 2016. "Inequality, Educational Choice and Public School Quality in Income Mixing Communities," AMSE Working Papers 1629, Aix-Marseille School of Economics, Marseille, France.
    3. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, vol. 28(4), pages 557-573.
    4. Debora Di Gioacchino & Laura Sabani & Simone Tedeschi, 2016. "Differences in education systems across OECD countries: the role of education policy preferences in a hierarchical system," Working Papers 177, University of Rome La Sapienza, Department of Public Economics.
    5. Poutvaara, Panu, 2011. "The expansion of higher education and time-consistent taxation," European Journal of Political Economy, Elsevier, vol. 27(2), pages 257-267, June.
    6. Markussen, Thomas, 2011. "Democracy, redistributive taxation and the private provision of public goods," European Journal of Political Economy, Elsevier, vol. 27(1), pages 201-213, March.
    7. Di Gioacchino, Debora & Sabani, Laura & Tedeschi, Simone, 2014. "Preferences for social protection: Theory and empirics," Economic Modelling, Elsevier, vol. 36(C), pages 629-644.
    8. Anderberg, Dan, 2013. "Post-compulsory education: Participation and politics," European Journal of Political Economy, Elsevier, vol. 29(C), pages 134-150.

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