Private versus Public Schools in Post-Apartheid South African Cities: Theory and Policy Implications

Yves Zenou and Harris Selod

No 3358, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Black and white families are heterogenous both in income and ability and simultaneously decide where to locate in the city and which school (private or public) to send their children. We show that, in equilibrium, despite the tuition fees imposed by whites, some black pupils may attend the private school. In fact three different equilibrium regimes can occur: either all, some, or none of the black pupils attend the private school. In all three cases, white families reside close to the private school attended by their children whereas black families locate further away. This market solution is shown not to be optimal, one of the reasons being that whites overprice education in order to limit black attendance at the private school, protecting their children from negative human capital externalities. Three types of education policies publicly financed by an income tax are then considered: transportation subsidies, private-school vouchers and public school spending. The efficiency of such policies depends on the fee-setting behaviour of whites, which strongly varies from one policy to another.

Keywords: Fees; Education externalities; Urban segregation; Busing; Vouchers (search for similar items in EconPapers)
JEL-codes: H20 I20 R14 (search for similar items in EconPapers)
Date: 2002-05
New Economics Papers: this item is included in nep-geo and nep-ure
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Citations: View citations in EconPapers (1)

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Journal Article: Private versus public schools in post-Apartheid South African cities: theory and policy implications (2003)
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