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Public School Finance in a General Equilibrium Tiebout World: Equalization Programs, Peer Effects and Private School Vouchers

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  • Thomas J. Nechyba

Abstract

This paper uses computable general equilibrium simulations to investigate the effect of private school vouchers. It improves on past computational approaches by (i) endogenizing the funding of public schools through the modelling of an explicit political process at the school district level; (ii) embedding the private/public school choice in a Tiebout model in which agents also choose between communities that provide different public school/property tax packages; and (iii) allowing for a variety of different public school financing mechanisms ranging from purely local financing and control all the way to pure state funding. While voucher programs are shown to increase school-based stratification of agents, they tend to decrease residence-based stratification. This implies that untargeted vouchers may be equity-enhancing under some institutional settings even when there are no direct improvements in public school efficiency from increased competition. Furthermore, the effects of targeting vouchers to low income districts may not differ significantly from the effects of untargeted voucher plans.

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  • Thomas J. Nechyba, 1996. "Public School Finance in a General Equilibrium Tiebout World: Equalization Programs, Peer Effects and Private School Vouchers," NBER Working Papers 5642, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5642
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    Cited by:

    1. T. A. Downes & D. N. Figlio, "undated". "School Finance Reforms, Tax Limits, and Student Performance: Do Reforms Level Up or Dumb Down?," Institute for Research on Poverty Discussion Papers 1142-97, University of Wisconsin Institute for Research on Poverty.
    2. Chakrabarti Rajashri, 2013. "Impact of Voucher Design on Public School Performance: Evidence from Florida and Milwaukee Voucher Programs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 349-394, July.
    3. Pablo González & Alejandra Mizala & Pilar Romaguera, 2002. "Recursos diferenciados a la educación subvencionada en Chile," Documentos de Trabajo 150, Centro de Economía Aplicada, Universidad de Chile.
    4. Caroline M. Hoxby, 2000. "Does Competition among Public Schools Benefit Students and Taxpayers?," American Economic Review, American Economic Association, vol. 90(5), pages 1209-1238, December.
    5. Thomas Downes, 2003. "School Finance Reform and School Quality: Lessons from Vermont," Discussion Papers Series, Department of Economics, Tufts University 0309, Department of Economics, Tufts University.
    6. Mancebón-Torrubia, María Jesús & Ximénez-de-Embún, Domingo Pérez, 2009. "Spanish publicly-subsidised private schools and equality of school choice," MPRA Paper 21164, University Library of Munich, Germany.
    7. Nechyba, Thomas, 1996. "A computable general equilibrium model of intergovernmental aid," Journal of Public Economics, Elsevier, vol. 62(3), pages 363-397, November.
    8. McMillan, Robert, 2005. "Erratum to "Competition, incentives, and public school productivity"," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1133-1154, June.
    9. Chakrabarti, Rajashri, 2008. "Can increasing private school participation and monetary loss in a voucher program affect public school performance? Evidence from Milwaukee," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1371-1393, June.
    10. Farnham, Martin & Sevak, Purvi, 2006. "State fiscal institutions and empty-nest migration: Are Tiebout voters hobbled?," Journal of Public Economics, Elsevier, vol. 90(3), pages 407-427, February.
    11. Caroline Hoxby, 2000. "Peer Effects in the Classroom: Learning from Gender and Race Variation," NBER Working Papers 7867, National Bureau of Economic Research, Inc.
    12. Jaag, Christian, 2006. "School Competition," MPRA Paper 339, University Library of Munich, Germany.
    13. McMillan, Robert, 2004. "Competition, incentives, and public school productivity," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1871-1892, August.
    14. Nechyba, Thomas J. & Strauss, Robert P., 1998. "Community choice and local public services: A discrete choice approach," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 51-73, January.
    15. Mar�a Jesús Manceb�n-Torrubia & Domingo P�rez Xim�nez-de-Embún, 2014. "Equality of school choice: a study applied to the Spanish region of Arag�n," Education Economics, Taylor & Francis Journals, vol. 22(1), pages 90-111, February.
    16. V. Vandenberghe, 2002. "Evaluating the magnitude and the stakes of peer effects analysing science and math achievement across OECD," Applied Economics, Taylor & Francis Journals, vol. 34(10), pages 1283-1290.
    17. Luengo-Prado, Maria Jose & Volij, Oscar, 2003. "Public education, communities and vouchers," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(1), pages 51-73.
    18. Thomas Nechyba, 1996. "Fiscal federalism and local public finance: A computable general equilibrium (CGE) framework," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(2), pages 215-231, May.
    19. Thomas A. Downes, 2002. "Do state governments matter?: a review of the evidence on the impact on educational outcomes of the changing role of the states in the financing of public education," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 47(Jun), pages 143-180.
    20. Lars P. Feld & Gebhard Kirchgässner, 2000. "Income Tax Competition at the State and Local Level in Switzerland," CESifo Working Paper Series 238, CESifo.
    21. Feld, Lars P. & Kirchgassner, Gebhard, 2001. "Income tax competition at the State and Local Level in Switzerland," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 181-213, April.
    22. O'Shaughnessy, Terry, 2007. "Parental choice and school quality when peer and scale effects matter," Economics of Education Review, Elsevier, vol. 26(4), pages 501-515, August.
    23. McEwan, Patrick J., 2003. "Peer effects on student achievement: evidence from Chile," Economics of Education Review, Elsevier, vol. 22(2), pages 131-141, April.

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    More about this item

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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