The political economy of post-compulsory education policy with endogenous credit constraints

Arbeitspapier

Altruistic parents, who differ in income, make financial transfers to their children, who differ in ability. The children invest in post-compulsory education, subject to an endogenous credit constraint, and taking policy as given. There are two policy tools: a subsidy to those who participate in education and a proportional income tax. Not all children participate; a larger subsidy encourages participation, and a larger income tax discourages it. The parents, prior to making transfers, vote on policy. A voting equilibrium, if it exists, is such that voters in the two tails of the income distribution support a reduction, while the “middle-class” supports an expansion, of the education subsidy. Public support of education is a policy with regressive elements as it entails, among other things, a redistribution from the poor to the middle-earners. We characterise a local equilibrium analytically, verify its existence numerically, and finally perform a number of comparative statics exercises.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2304

Classification and Topics

• Classification: Wirtschaft ; National Government Expenditures and Education ; Education: Government Policy
• Subject: Bildungspolitik ; Public Choice ; Bildungsfinanzierung ; Einkommensteuer ; Bildungsfinanzierung ; Verschuldungsrestriktion ; Subvention ; Eltern ; Soziale Schicht ; Wahlverhalten ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Anderberg, Dan ; Balestrino, Alessandro
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/26349
• Last update: 10.03.2025, 11:44 AM CET