Working Paper: CEPR ID: DP5799
Authors: David de la Croix; Matthias Doepke
Abstract: The governments of nearly all countries are major providers of primary and secondary education to their citizens. In some countries, however, public schools coexist with private schools, while in others the government is the sole provider of education. In this study, we ask why different societies make different choices regarding the mix of private and public schooling. We develop a theory which integrates private education and fertility decisions with voting on public schooling expenditures. In a given political environment, high income inequality leads to more private education, as rich people opt out of the public system. More private education, in turn, results in an improved quality of public education, because public spending can be concentrated on fewer students. Comparing across political systems, we find that concentration of political power can lead to multiple equilibria in the determination of public education spending. The main predictions of the theory are consistent with state-level and micro data from the United States as well as cross-country evidence from the PISA study.
Keywords: democracy; private education; probabilistic voting; public education
JEL Codes: D72; H42; I21; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher income inequality (D31) | increase in private education (H52) |
| increase in private education (H52) | improves quality of public education (H52) |
| higher income inequality (D31) | improves quality of public education (H52) |
| concentrated political power (D72) | affects quality of public education (I24) |
| concentrated political power among the wealthy (P16) | multiple equilibria in public education spending (H52) |
| political power biased towards the rich (D72) | high-quality public education with universal participation or low-quality public education with significant private schooling (I24) |