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Why Do Education Vouchers Fail?

39 Pages Posted: 19 Aug 2009  

Gerhard Glomm

Indiana University Bloomington - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Peter Bearse

University of North Carolina (UNC) at Greensboro - Department of Economics

Buly A. Cardak

La Trobe University - School of Economics

B. Ravikumar

Federal Reserve Bank of Saint Louis

Date Written: August 16, 2009

Abstract

We examine quantitatively why uniform vouchers have repeatedly suffered electoral defeats against the current system where public and private schools coexist. We argue that the topping-up option available under uniform vouchers is not suficiently valuable for the poorer households to prefer the uniform vouchers to the current mix of public and private education. We then develop a model of publicly funded means-tested education vouchers where the voucher received by each household is a linearly decreasing function of income. Public policy, which is determined by majority voting, consists of two dimensions: the overall funding level (or the tax rate) and the slope of the means testing function. We solve the model when the political decisions are sequential-households vote first on the tax rate and then on the extent of means testing. We establish that a majority voting equilibrium exists. We show that the means-tested voucher regime is majority preferred to the status-quo. These results are robust to alternative preference parameters, income distribution parameters and voter turnout.

Suggested Citation

Glomm, Gerhard and Bearse, Peter and Cardak, Buly A. and Ravikumar, B., Why Do Education Vouchers Fail? (August 16, 2009). CAEPR Working Paper No. 014-2009. Available at SSRN: https://ssrn.com/abstract=1456391 or http://dx.doi.org/10.2139/ssrn.1456391

Gerhard Glomm (Contact Author)

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States
812-855-7256 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Peter Bearse

University of North Carolina (UNC) at Greensboro - Department of Economics ( email )

Greensboro, NC 27402-6165
United States

Buly Cardak

La Trobe University - School of Economics ( email )

Bundoora
Bundoora, Victoria 3083 3086
Australia
+61 3 9479 3419 (Phone)
+61 3 9479 1654 (Fax)

B. Ravikumar

Federal Reserve Bank of Saint Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

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