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Inequality and Education Funding: Theory and Evidence from the U.S. School DistrictsCalin ArcaleanESADE Ramon Llull University - Department of Economics Ioana C. SchiopuESADE Ramon Llull University - Department of Economics September 1, 2010 Abstract: We investigate the relationship between inequality and education funding in a model of probabilistic voting over public education spending where the private option is available. A change in inequality can have opposite effects at different income levels: higher inequality decreases public spending per student and increases enrollment in public schools in poor economies, while the opposite holds in the rich ones. A change in the tax base can also have non-monotonic effects. We also study the implications of different voting participation across income groups. The predictions of the model are supported by U.S. school district-level data.
Number of Pages in PDF File: 37 Keywords: Education funding, Inequality, Political Economy JEL Classification: D72, H42, I21, I22 working papers seriesDate posted: December 11, 2010Suggested CitationContact Information
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