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Education Vouchers, Growth and Income Inequality

  • Buly A Cardak

    ()

    (Department of Economics and Finance, La Trobe University)

This paper studies a growth model with public and private education alternatives. The impact of education vouchers for economic growth and the evolution of income inequality are considered. Results indicate that introducing education vouchers can increase economic growth. Households switching from public to private education experience higher incomes. This raises the tax base, in turn raising public education expenditures and growth of the whole economy. Vouchers are found to generally in- crease income inequality. Welfare comparisons show that voucher schemes may in some cases gain majority support, depending on assumptions and parameters. The results add a new dimension on which vouchers can be evaluated in the continuing policy debate.

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File URL: http://www.latrobe.edu.au/__data/assets/pdf_file/0004/130891/2004.03.pdf
File Function: First version, 2004.03.pdf
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Paper provided by School of Economics, La Trobe University in its series Working Papers with number 2004.03.

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Length: 39 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:ltr:wpaper:2004.03
Contact details of provider: Web page: http://www.latrobe.edu.au/economics

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  1. Eckstein, Z. & Zilcha, I., 1991. "The Effects of Compulsury Schooling on Growth Income Distribution and Welfare," Papers 38-91, Tel Aviv.
  2. Bearse, P. & Glomm, G. & Ravikumar, B., 1999. "On the Political Economy of Means-Tested Education Vouchers," Papers 9904, Michigan State - Econometrics and Economic Theory.
  3. Cecilia Elena Rouse, 1998. "Private School Vouchers And Student Achievement: An Evaluation Of The Milwaukee Parental Choice Program," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 553-602, May.
  4. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  5. Lillard, Lee A, 1977. "Inequality: Earnings vs. Human Wealth," American Economic Review, American Economic Association, vol. 67(2), pages 42-53, March.
  6. Gradstein, Mark & Justman, Moshe, 2000. "Human capital, social capital, and public schooling," European Economic Review, Elsevier, vol. 44(4-6), pages 879-890, May.
  7. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
  8. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
  9. 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.
  10. Hoyt, William H. & Lee, Kangoh, 1998. "Educational vouchers, welfare effects, and voting," Journal of Public Economics, Elsevier, vol. 69(2), pages 211-228, June.
  11. West, Edwin G, 1997. "Education Vouchers in Principle and Practice: A Survey," World Bank Research Observer, World Bank Group, vol. 12(1), pages 83-103, February.
  12. Galor, Oded, 1996. "Convergence? Inferences from Theoretical Models," CEPR Discussion Papers 1350, C.E.P.R. Discussion Papers.
  13. Buly A. Cardak, 2004. "Education Choice, Endogenous Growth and Income Distribution," Economica, London School of Economics and Political Science, vol. 71, pages 57-81, 02.
  14. Gradstein, Mark & Justman, Moshe, 1997. " Democratic Choice of an Education System: Implications for Growth and Income Distribution," Journal of Economic Growth, Springer, vol. 2(2), pages 169-83, July.
  15. repec:ltr:wpaper:2004.03 is not listed on IDEAS
  16. Buly A Cardak, 2001. "Education Vouchers, Growth and Income Inequality," Working Papers 2001.06, School of Economics, La Trobe University.
  17. Kaganovich, Michael & Zilcha, Itzhak, 1999. "Education, social security, and growth," Journal of Public Economics, Elsevier, vol. 71(2), pages 289-309, February.
  18. Gerhard Glomm & B. Ravikumar, 1998. "Flat-Rate Taxes, Government Spending on Education, and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 306-325, January.
  19. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  20. Cohen-Zada, Danny & Justman, Moshe, 2003. "The political economy of school choice: linking theory and evidence," Journal of Urban Economics, Elsevier, vol. 54(2), pages 277-308, September.
  21. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  22. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March.
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