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The politics of public provision of education

  • Gilat Levy

Public provision of education is usually viewed as a form of redistribution in kind. However, does it arise when income redistribution is feasible as well? I analyze a two-dimensional model of political decision-making with endogenous political parties. Society chooses both the tax rate and the allocation of the revenues between income redistribution and public education. Agents differ in their income and in their age, where young agents prefer public education and the old prefer income redistribution. I find that when the cohort size of the young is not too large then public education arises as a political compromise between the rich and the young segment of the poor. They collude in order to reduce the size of government (which benefits the rich) and target some of its resources to education (which benefits the young poor). When the cohort size of the young is too large, however, income redistribution crowds out public provision of education in the political equilibrium. Copyright (c) 2005 Massachusetts Institute of Technology.

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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 940.

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Date of creation: Nov 2005
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Publication status: Published in Quarterly Journal of Economics, November, 2005, 120(4), pp. 1507-1534. ISSN: 0033-5533
Handle: RePEc:ehl:lserod:940
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  1. Raquel Fernandez & Richard Rogerson, 1999. "Equity and Resources: An Analysis of Education Finance Systems," NBER Working Papers 7111, National Bureau of Economic Research, Inc.
  2. Stiglitz, J. E., 1974. "The demand for education in public and private school systems," Journal of Public Economics, Elsevier, vol. 3(4), pages 349-385, November.
  3. Harris, Amy Rehder & Evans, William N. & Schwab, Robert M., 2001. "Education spending in an aging America," Journal of Public Economics, Elsevier, vol. 81(3), pages 449-472, September.
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  5. Alberto Alesina & Reza Baqir & William Easterly, 1997. "Public Goods and Ethnic Divisions," NBER Working Papers 6009, National Bureau of Economic Research, Inc.
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  8. Ray, D. & Vohra, R., 1993. "Equilibrium Binding Agreements," Papers 21, Boston University - Department of Economics.
  9. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
  10. Gilat Levy, 2004. "A model of political parties," LSE Research Online Documents on Economics 540, London School of Economics and Political Science, LSE Library.
  11. Austen-Smith, David, 2003. "Majority preference for subsidies over redistribution," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1617-1640, August.
  12. Tim Besley & Stephen Coate, . ""An Economic Model of Representative Democracy''," CARESS Working Papres 95-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  13. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
  14. James M. Poterba, 1997. "Demographic structure and the political economy of public education," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
  15. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
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