Working Paper: NBER ID: w13319
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: No keywords provided
JEL Codes: H42; H52; I22; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| High income inequality (D31) | Increased share of private education (I21) |
| Increased share of private education (I21) | Improved quality of public education (I21) |
| High income inequality (D31) | Improved quality of public education (I21) |
| Equal political power (D72) | Increased public education funding with inequality (I24) |
| Opting-out behavior of wealthier families (D19) | Decline in overall tax rates (H29) |
| Public school usage by poorer parents (I24) | More children (J13) |
| Schooling choices (I21) | Fertility decisions (J13) |
| Political bias (D72) | Multiple equilibria in education quality (I21) |
| Multiple equilibria (D59) | High-quality public education or low-quality public education (I24) |