The Political Economy of Mixed Public and Private Schooling: A Dynamic Analysis

Abstract

This paper analyzes the political economy of education, acquired through a combination of compulsory public schooling and supplementary private education, in the context of an OLG model in which growth is driven by the accumulation of human capital. The level of public schooling, fully funded by a proportional income tax, is determined by majority vote, while supplementary private education is purchased individually. We show existence of a political-economic equilibrium and examine its characteristics, describing the evolution of the public-private mix over time: for moderate parameter values the share of public schooling increases as incomes rise and inequality falls.

JEL Classification: I2