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Public education for the minority, private education for the majority

Levy, Gilat (2004) Public education for the minority, private education for the majority. TE/04/470. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, Brazil.

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Abstract

Public provision of private goods such as education is usually viewed as a form of redistribution in kind. However, does it arise when income redistribution is feasible as well? In this paper I analyse a two-dimensional model of political decision making. Society has to choose both the tax rate and the allocation of the revenues between income redistribution and public provision of education. The political process that I analyse involves endogenous parties. Parties have a unique role in the model; I assume that parties increase the commitment ability of politicians and, as a result, increase the ability of different groups in society to compromise with one another. I find that public provision of education arises as an anti-majoritarian outcome; public provision of education arises only when those who benefit from education, e.g., voters with children, are a minority. The reason is that when education is consumed only by a minority, such redistribution in kind is 'cheap' relative to universal income redistribution, i.e., it can be effectively provided even with low taxes. Public provision of education arises then as a political compromise offered by the party of the poor who benefit from education and the rich voters who prefer low taxes. Thus, when those who benefit from education are a minority, it is publicly provided. When those who benefit from education are a majority, they have to buy private education, since there is no public provision of this good.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk/
Additional Information: © 2004 Gilat Levy.
Library of Congress subject classification: H Social Sciences > HT Communities. Classes. Races
J Political Science > JC Political theory
H Social Sciences > HJ Public Finance
L Education > L Education (General)
Journal of Economic Literature Classification System: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education
H - Public Economics > H4 - Publicly Provided Goods > H42 - Publicly Provided Private Goods
Sets: Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: TE/04/470
Date Deposited: 29 Feb 2008
URL: http://eprints.lse.ac.uk/3617/

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