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Public Education Financing, Earnings Inequality, and Intergenerational Mobility

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  • Christopher Herrington

    (Virginia Commonwealth University)

Abstract

Among developed countries there are large differences in earnings inequality and intergenerational earnings persistence. This paper investigates public education and tax policies as a possible source for these differences. Empirical and quantitative policy experiments focus on the case of the U.S. and Norway. An overlapping generations model is developed and calibrated to match U.S. data. Functions for labor taxes and public education spending are estimated for each country and incorporated into the model. The benchmark exercise finds that taxes and public education spending account for about one-third of differences in earnings inequality and 14 percent of differences in intergenerational earnings persistence between the U.S. and Norway. Furthermore, public intervention in early childhood education more than doubles the impact of these policy changes. (Copyright: Elsevier)

Suggested Citation

  • Christopher Herrington, 2015. "Public Education Financing, Earnings Inequality, and Intergenerational Mobility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 822-842, October.
  • Handle: RePEc:red:issued:14-35
    DOI: 10.1016/j.red.2015.07.006
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rauh, Christopher, 2017. "Voting, education, and the Great Gatsby Curve," Journal of Public Economics, Elsevier, vol. 146(C), pages 1-14.
    2. Kocharkov, Georgi & Mellert, Jan & Filote, Andra, 2015. "Teenage Childbearing and the Welfare State," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113116, Verein für Socialpolitik / German Economic Association.
    3. Hellier, Joël, 2017. "Stratified higher education,social mobility at the top and efficiency: The case of the French ‘Grandes écoles’," MPRA Paper 76724, University Library of Munich, Germany.
    4. Christopher Rauh, 2015. "The Political Economy of Early and College Education - Can Voting Bend the Great Gatsby Curve?," 2015 Meeting Papers 82, Society for Economic Dynamics.
    5. Guido Neidhöfer, 2016. "Intergenerational Mobility and the Rise and Fall of Inequality: Lessons from Latin America," CEDLAS, Working Papers 0196, CEDLAS, Universidad Nacional de La Plata.
    6. Teodora Boneva & Christopher Rauh, 2018. "Parental Beliefs about Returns to Educational Investments—The Later the Better?," Journal of the European Economic Association, European Economic Association, vol. 16(6), pages 1669-1711.
    7. Yum, Minchul, 2016. "Parental time investment and intergenerational mobility," Working Papers 16-06, University of Mannheim, Department of Economics.
    8. Vera Tolstova, 2018. "On the Optimal Progressivity of Higher Education Subsidies: the Role of Endogenous Fertility," CERGE-EI Working Papers wp613, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Adam Blandin & Christopher Herrington, 2018. "Family Structure, Human Capital Investment, and Aggregate College Attainment," 2018 Meeting Papers 446, Society for Economic Dynamics.

    More about this item

    Keywords

    Inequality; Intergenerational mobility; Intergenerational persistence; Public education; Higher education; Labor taxes;

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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