Endogenous Public Expenditures on Education

Abstract

We construct a model of the determination of public funding of education through majority voting. Households have the option of privately supplementing public education. Alternatively, they can opt out of public education completely and choose private education. We find that in general the single-crossing property cannot be used to establish existence of a majority voting equilibrium. Numerical solutions of the model reveal (i) when public education inputs and private supplements are substitutes, private school enrollment is often zero; and (ii) the funding level for public education is very sensitive to the productivity of private supplements and the elasticity of substitution between public inputs and private supplements. Copyright 2005 Blackwell Publishing Inc..

Public versus private investment and growth in a hierarchical education system

“…In view of the previous discussion, we assume that private and public inputs are combined in a CES aggregator, like in Bearse et al (2005). The human capital acquired in the first stage by a young agent at time t is given by the following…”

Inequality and education decisions in developing countries

“…2 Moreover, in developing economies school attendance has an important opportunity cost for the household, either in terms of household chores or child labor income. 3 Second, private school enrollment in developing countries is usually higher than in high income countries, and while in many high income countries private education is partially financed by public funds, this is rarely the case in low income countries. 4 The fact that inequality affects education outcomes, together with the above mentioned features of educational systems in developing countries, may have important implications for educational policy and inequality reducing policies.…”

“…See among others Saint-Paul and Verdier[28], Benabou[5], Fernández and Rogerson[11,13,14] , Glomm and Ravikumar[20,21] , Bearse et al[3,4], Sylwester[32,34], Ferreira[15], Glomm[18].…”

“…In Iran, grades 6th to 8th are compulsory, but attendance falls short of 75%. In South Africa education is compulsory up to 10th grade, but by 8th grade attendance is around 60%[27] 3. This is supported by the fact that while child labor is null in OECD countries, labor participation rates are astoundingly high for developing countries ranging from up to 40% in Africa to 20% in Latin America[22].…”

The rise in returns to education and the decline in household savings

“…27 There is very little evidence on the elasticity of substitution. Bearse et al (2005) assume a similar specification and suggest that the little empirical evidence that exists is weighed towards the two types of expenditures being substitutes (i.e. r40Þ.…”