Inequality and Education Funding: Theory and Evidence from the U.S. School Districts
40 Pages Posted: 13 Nov 2010 Last revised: 19 Apr 2012
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Inequality and Education Funding: Theory and Evidence from the U.S. School Districts
Date Written: March 1, 2012
Abstract
We investigate the relationship between inequality and public education funding in a model of probabilistic voting where the private option is available and voting participation differs across income groups. 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. These theoretical predictions, with support in U.S. school district-level data, reconcile previous contradictory results in the political economy literature on redistribution and inequality.
Keywords: Education funding, Inequality, Political Economy
JEL Classification: D72, H42, I21, I22
Suggested Citation: Suggested Citation
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