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On The Political Economy Of Educational Vouchers

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  • Dennis N. Epple
  • Richard Romano

Abstract

Two significant challenges hamper analyses of the collective choice of educational vouchers. One is the multi-dimensional choice set arising from the interdependence of the voucher, public education spending, and taxation. Second, even absent a voucher, preferences over public spending are not single-peaked; a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending. We show that Besley and Coate's (1997) representative democracy model provides a viable approach to overcome these hurdles. We provide a complete characterization of equilibria with an endogenous voucher. A voucher is adopted in political equilibrium provided the coefficient of variation of income is sufficiently small. We undertake a parallel quantitative analysis. We find that no voucher arises in equilibrium for the U.S. income distribution, which exhibits too much heterogeneity. For tighter income distributions, including those in Douglas County, Colorado (where a voucher was recently adopted) and in Denmark (which has a national voucher program) our model predicts a positive voucher. Public support for a not-too-large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those who attend private school in the absence of a voucher.

Suggested Citation

  • Dennis N. Epple & Richard Romano, 2012. "On The Political Economy Of Educational Vouchers," NBER Working Papers 17986, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17986
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    Cited by:

    1. Akyol, Metin, 2016. "Do educational vouchers reduce inequality and inefficiency in education?," Economics of Education Review, Elsevier, vol. 55(C), pages 149-167.
    2. repec:eee:poleco:v:48:y:2017:i:c:p:91-103 is not listed on IDEAS
    3. George Economides & Apostolis Philippopoulos & Stelios Sakkas, 2016. "Tuition Fees, as User Prices, and Private Incentives," CESifo Working Paper Series 5991, CESifo Group Munich.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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