Education Choice of Households and Income Inequality -Empirical Research of Mixed Public and Private Education Model-

This paper presents consideration of a case in which household education investment, which determines the human capital of children, is made using education of two types: public and private. Furthermore, these analyses based on prefectural panel data obtained for Japan are done using a theoretical model by which income inequality affects household education choice and illustrates empirically whether or not the choice of public and private education in junior and senior high school in Japan is affected by household income inequality and by the subsidy provided by central and local governments for high school tuition fees. The analyses yield the following three results. First, in prefectures with high household income inequality, the preference for public education is slight. Second, a policy of no tuition fees for public high schools and a decrease in tuition fees for private high schools that started from 2010 do not affect public and private education choice for high school. Nevertheless, this policy strongly affects enrollment in private junior high schools. Third, an increase in subsidies for tuition fees of private high school started in 2014 raises preferences for private junior high schools and high schools. In addition, in the prefecture in which subsidies for tuition fees that are higher than the level decided by cental government and the subsidies own benefit for enrollment fees, enrollment in private high school is observed to be stimulated.