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Central versus local education finance: a political economy approach

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  • Rainald Borck

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Abstract

This paper models voters' preferences over central versus local education policies when there are private alternatives. Education is financed by income taxes and individuals are mobile between communities. Public education levels are chosen by majority vote. Contrary to conventional wisdom, centralisation may benefit the rich and poor, while the middle class prefer decentralised education. The model is also extended to include peer effects. Peer effects increase the support for central school finance, even in the community with good public schools.
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Suggested Citation

  • Rainald Borck, 2008. "Central versus local education finance: a political economy approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(3), pages 338-352, June.
  • Handle: RePEc:kap:itaxpf:v:15:y:2008:i:3:p:338-352
    DOI: 10.1007/s10797-007-9029-9
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    References listed on IDEAS

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    Cited by:

    1. Marcelin Joanis, 2013. "Sharing the Blame? Local Electoral Accountability and Centralized School Finance in California," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 335-359, November.
    2. Ivo Bischoff & Ferry Prasetyia, 2015. "Determinants of local public expenditures on education: empirical evidence for Indonesian districts between 2005 and 2012," MAGKS Papers on Economics 201532, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. Ulrich Oberndorfer & Viktor Steiner, 2007. "Generationen- oder Parteienkonflikt? Eine empirische Analyse der deutschen Hochschulausgaben," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 165-183, March.
    4. 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.
    5. Niklas Potrafke, 2006. "Parties Matter in Allocating Expenditures: Evidence from Germany," Discussion Papers of DIW Berlin 652, DIW Berlin, German Institute for Economic Research.
    6. Oberndorfer, Ulrich & Steiner, Viktor, 2006. "Intergenerational Conflict, Partisan Politics, and Public Higher Education Spending: Evidence from the German States," IZA Discussion Papers 2417, Institute for the Study of Labor (IZA).
    7. Ulrich Oberndorfer & Viktor Steiner, 2006. "Generationen- oder Parteienkonflikt?: Eine empirische Analyse der deutschen Hochschulausgaben," Discussion Papers of DIW Berlin 603, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Education; Centralisation; Private schools; Majority voting; I22; H72; D72;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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