On the political economy of educational vouchers

Dennis Epple and Richard Romano

Journal of Public Economics, 2014, vol. 120, issue C, 62-73

Abstract: Two significant challenges hamper the analyses of the collective choice of educational vouchers. One is the multi-dimensional choice set arising from the interdependence of the voucher, public education spending, and taxation. Second, even absent a voucher, preferences over public spending are not single-peaked; a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending. We show that Besley and Coate's (1997) representative democracy model provides a viable approach to overcome these hurdles. We provide a complete characterization of equilibria with an endogenous voucher. A voucher is adopted in political equilibrium provided the coefficient of variation of income is sufficiently small. We undertake a parallel quantitative analysis and we find that no voucher arises in equilibrium for the U.S. income distribution, which exhibits too much heterogeneity. For a tighter income distribution, including those in Douglas County, Colorado where a voucher was recently adopted, our model predicts a positive voucher. Public support for a not-too-large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those who attend private school in the absence of a voucher.

Keywords: Vouchers; Education political economy; Voting (search for similar items in EconPapers)
JEL-codes: D72 H44 I22 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: On The Political Economy Of Educational Vouchers (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:120:y:2014:i:c:p:62-73

DOI: 10.1016/j.jpubeco.2014.07.012

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