IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Beyond Serrano vs. Priest: National Funding of Education

Listed author(s):
  • Jorge Soares


    (George Washington University)

This paper develops a political economy of public funding of education to evaluate the welfare implications of a move from a stateÜwide education financing policy to a nationÜwide education financing policy. In a general equilibrium overlapping generations model where parents care about their children's lifetime utility, the rational and forward-looking agents vote for a level of public funding of education. In contrast to existing theories, we do not assume factor prices are invariant and the effects of an education policy on factor prices are important in the determination of the equilibrium level of this policy. While altruism plays a central political role, the complementarity between capital and labor in the production function induces support for a higher level of publicly funded education, and the equilibrium tax rate is higher when the educational policy has an impact on the factor prices. Further, with a payÜasÜyouÜgo social security system, increased labor skill level affects the level of benefits received by the retirees and also influences the political choice of the agents. I show that a move from a stateÜ to a nationÜwide decision level, where the impacts of the educational policy on factor prices and social security benefits are internalized by the voters, can increase the level of income in the economy and the welfare of the agents. Further, the benefits of the general equilibrium effects are bigger in more unequal economies, increasing the benefits of a move to a nation-wide policy decision level. Finally, if the states are heterogeneous, there are also efficiency gains from equating education expenditures across students. And a move from community- to state-wide public funding of education can raise the steadyÜstate output and welfare levels. In the first place there are efficiency gains from equating spending per student in the presence of heterogeneity as in Fernandez and Rogerson (1994). In the second place, moving to a stateÜwide financing of education widens the tax base and increases the return to each parent's contribution.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 1999 with number 233.

in new window

Date of creation: 01 Mar 1999
Handle: RePEc:sce:scecf9:233
Contact details of provider: Postal:
CEF99, Boston College, Department of Economics, Chestnut Hill MA 02467 USA

Fax: +1-617-552-2308
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:sce:scecf9:233. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.