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The political economy of public spending on education, inequality, and growth

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  • Gradstein, Mark

Abstract

Public provision of education has often been perceived as universal and egalitarian, but in reality it is not. Political pressure typically results in incidence bias in favor of the rich. The author argues that the bias in political influence resulting from extreme income inequalities is particularly likely to generate an incidence bias, which we call social exclusion. This may then lead to a feedback mechanism whereby inequality in the incidence of public spending on education breeds higher income inequality, thus generating multiple equilibria: with social exclusion and high inequality; and with social inclusion and relatively low inequality. The author also shows that the latter equilibrium leads to higher long-run growth than the former. An extension of the basic model reveals that spillover effects among members of social groups differentiated by race or ethnicity may reinforce the support for social exclusion.

Suggested Citation

  • Gradstein, Mark, 2003. "The political economy of public spending on education, inequality, and growth," Policy Research Working Paper Series 3162, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3162
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    References listed on IDEAS

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    6. Addison, Tony & Rahman, Aminur, 2001. "Why is so Little Spent on Educating the Poor?," WIDER Working Paper Series 029, World Institute for Development Economic Research (UNU-WIDER).
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    8. Bertocchi, Graziella & Spagat, Michael, 2004. "The evolution of modern educational systems: Technical vs. general education, distributional conflict, and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 559-582, April.
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    Cited by:

    1. Pham, Thi Kim Cuong, 2005. "Economic growth and status-seeking through personal wealth," European Journal of Political Economy, Elsevier, vol. 21(2), pages 407-427, June.
    2. Di Gioacchino, Debora & Sabani, Laura, 2009. "Education policy and inequality: A political economy approach," European Journal of Political Economy, Elsevier, vol. 25(4), pages 463-478, December.

    More about this item

    Keywords

    Public Health Promotion; Environmental Economics&Policies; Decentralization; Economic Theory&Research; Health Monitoring&Evaluation; Inequality; Poverty Assessment; Governance Indicators; Achieving Shared Growth; Economic Theory&Research;

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