Public Versus Private Provisioning: Role of Education and Political Participation

45 Pages Posted: 27 Mar 2017

See all articles by Mausumi Das

Mausumi Das

Delhi School of Economics

Adway De

University of Delhi - Delhi School of Economics

Skand Goel

University of Delhi - Delhi School of Economics

Tridip Ray

Indian Statistical Institute, New Delhi - Delhi Centre

Date Written: December 4, 2013

Abstract

This paper studies the role played by education in the public provision of private ‘merit goods’, such as healthcare, schooling, security and so on. Corruption is endemic in public provision. Better educated individuals are more effective at exerting political pressure, which reduces corruption and improves quality of the merit goods delivered.

At the same time, educated elite have higher incomes which allows them to opt out of public provisioning and form a private club that delivers the merit good/service to its members. This may lead to deterioration of public provisioning. Depending on parametric conditions, several equilibrium configurations exist, some exhibiting multiple equilibria – with different degrees of corruption and concomitant variation in the quality of public provision and welfare of people. Under a stochastic adaptive dynamic process, almost surely a unique equilibrium will be selected, which need not be the one which is least corrupt or most efficient. This brings in the scope for effective policy intervention. We also analyze the long run wealth dynamics and its implication for the public vis-a-vis private provisioning.

Keywords: H42, I24, I25, P16, P26

JEL Classification: Education, Political Participation, Public Provision, Private Provision

Suggested Citation

Das, Mausumi and De, Adway and Goel, Skand and Ray, Tridip, Public Versus Private Provisioning: Role of Education and Political Participation (December 4, 2013). Available at SSRN: https://ssrn.com/abstract=2941064

Mausumi Das (Contact Author)

Delhi School of Economics ( email )

Delhi University North Campus
Delhi, Delhi 110007
India

Adway De

University of Delhi - Delhi School of Economics

G.T. Road,
Shahdara
Delhi-110007, Delhi 110032
India

Skand Goel

University of Delhi - Delhi School of Economics ( email )

G.T. Road,
Shahdara
Delhi-110007, Delhi 110032
India

Tridip Ray

Indian Statistical Institute, New Delhi - Delhi Centre ( email )

7 S .J. S.
Sansanwal Marg
New Delhi, 110016
India

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