Education regulation as an instrument of income distribution: The case of Ceara

Marcos Costa Holanda, Cláudio André Gondim Nogueira and Francis Petterini

The Quarterly Review of Economics and Finance, 2008, vol. 48, issue 2, 377-388

Abstract: The concern regarding the quality of public educational systems has become increasingly important in recent years, which is justified due to the role that education has as an instrument to promote economic development and income distribution. Since there are imperfect credit markets and other limiting aspects, the market is not able to provide education in the amounts that society desires and, therefore, the government has to intervene directly to provide the service to those who are not able to afford private education. The problem is that there is a clear disparity in terms of quality between public and private education. The private system is supposedly able to regulate itself through competition, while public education needs to be regulated by the State in order to assure minimum quality levels. In the context of the State of Ceara (Brazil), two public educational regulatory systems are compared: a public voucher system and a system based on teacher incentives. In the voucher system, competition would provide incentives to public schools to increase their levels of efficiency, but it may originate some "centers of excellence", penalizing the least efficient schools, and weak incentives to teachers may undermine its expected results. The system based on teacher incentives, on the other hand, could be considered as a form of "positive regulation" in the sense that there will be no sanctions to the worst schools. The idea is to reward, through pecuniary benefits, teachers and principals of those schools considered the best in terms of existing levels and/or in terms of improvement in the quality of the education provided. The main argument is that a system, such as the latter may induce a healthy competition among public schools that would end up improving teaching quality and achievement.

Date: 2008
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