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On the political economy of educational vouchers

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  • Epple, Dennis
  • Romano, Richard

Abstract

Two significant challenges hamper the analyses of the collective choice of educational vouchers. One is the multi-dimensional choice set arising from the interdependence of the voucher, public education spending, and taxation. Second, even absent a voucher, preferences over public spending are not single-peaked; a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending. We show that Besley and Coate's (1997) representative democracy model provides a viable approach to overcome these hurdles. We provide a complete characterization of equilibria with an endogenous voucher. A voucher is adopted in political equilibrium provided the coefficient of variation of income is sufficiently small. We undertake a parallel quantitative analysis and we find that no voucher arises in equilibrium for the U.S. income distribution, which exhibits too much heterogeneity. For a tighter income distribution, including those in Douglas County, Colorado where a voucher was recently adopted, our model predicts a positive voucher. Public support for a not-too-large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those who attend private school in the absence of a voucher.

Suggested Citation

  • Epple, Dennis & Romano, Richard, 2014. "On the political economy of educational vouchers," Journal of Public Economics, Elsevier, vol. 120(C), pages 62-73.
  • Handle: RePEc:eee:pubeco:v:120:y:2014:i:c:p:62-73
    DOI: 10.1016/j.jpubeco.2014.07.012
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    Cited by:

    1. Akyol, Metin, 2016. "Do educational vouchers reduce inequality and inefficiency in education?," Economics of Education Review, Elsevier, vol. 55(C), pages 149-167.
    2. Dennis Epple & Richard Romano & Sinan Sarpça, 2018. "Majority Choice of an Income-Targeted Educational Voucher," American Economic Journal: Microeconomics, American Economic Association, vol. 10(4), pages 289-325, November.
    3. Economides, George & Philippopoulos, Apostolis & Sakkas, Stelios, 2017. "Tuition fees: User prices and private incentives," European Journal of Political Economy, Elsevier, vol. 48(C), pages 91-103.
    4. George Economides & Apostolis Philippopoulos & Stelios Sakkas, 2016. "Tuition Fees, as User Prices, and Private Incentives," CESifo Working Paper Series 5991, CESifo Group Munich.

    More about this item

    Keywords

    Vouchers; Education political economy; Voting;

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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