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Public Education, Communities, and Vouchers

  • María J. Luengo Prado

    (Department of Economics, Brown University.)

  • Oscar Volij

    (Department of Economics, Brown University, and Department of Economics, Hebrew University of Jerusalem.)

This paper examines the effects of school vouchers on public school quality in a simple two-community model with local provision of education. Individuals differ only by income and one community imposes a fixed exogenous costs on its residents. The equilibria of the model are stratified with the rich community providing better education with a lower tax rate. We show that the introduction of a simple voucher system can result in a Pareto improvement as an equilibrium phenomenon. This improvement brings higher education quality to both communities. However, the quality difference between communities is shown to increase in equilibrium.

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Paper provided by Oscar Volij in its series Economic theory and game theory with number 008.

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Date of creation: 19 Jan 1999
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Publication status: Published in Quarterly Review of Economics and Finance, 43, 51-73, (2003).
Handle: RePEc:nid:ovolij:008
Contact details of provider: Postal: Oscar Volij, Department of Economics, Ben-Gurion University, Beer-Sheva 84105, Israel
Web page: http://volij.co.il/

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  1. 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.
  2. Manski, Charles F., 1992. "Educational choice (vouchers) and social mobility," Economics of Education Review, Elsevier, vol. 11(4), pages 351-369, December.
  3. Gerhard Glomm & B. Ravikumar, 1998. "Opting out of publicly provided services: A majority voting result," Social Choice and Welfare, Springer, vol. 15(2), pages 187-199.
  4. Raquel Fernandez & Richard Rogerson, 1993. "Keeping People Out: Income Distribution, Zoning and the Quality of Public Education," NBER Working Papers 4333, National Bureau of Economic Research, Inc.
  5. 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.
  6. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  7. D. N. Figlio & J. A. Stone, . "School Choice and Student Performance: Are Private Schools Really Better?," Institute for Research on Poverty Discussion Papers 1141-97, University of Wisconsin Institute for Research on Poverty.
  8. Hoyt, William H. & Lee, Kangoh, 1998. "Educational vouchers, welfare effects, and voting," Journal of Public Economics, Elsevier, vol. 69(2), pages 211-228, June.
  9. Fernandez, Raquel & Rogerson, Richard, 1998. "Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform," American Economic Review, American Economic Association, vol. 88(4), pages 813-33, September.
  10. Caroline Minter Hoxby, 1994. "Do Private Schools Provide Competition for Public Schools?," NBER Working Papers 4978, National Bureau of Economic Research, Inc.
  11. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August.
  12. 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.
  13. repec:eme:rlepps:v:18:y:1999:i:1999:p:115-140 is not listed on IDEAS
  14. Rangazas, Peter, 1995. "Vouchers in a community choice model with zoning," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(1), pages 15-39.
  15. Ireland, Norman J., 1990. "The mix of social and private provision of goods and services," Journal of Public Economics, Elsevier, vol. 43(2), pages 201-219, November.
  16. 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.
  17. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
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