Intergenerational Upward (Im)mobility and Political Support of Public Education Spending

Debora Di Gioacchino, Laura Sabani and Stefano Usai
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Stefano Usai: Collegio Carlo Alberto

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, 2022, vol. 8, issue 1, No 3, 49-76

Abstract: Abstract This paper provides a simple model of hierarchical education to study the political determination of public education spending and its allocation between different tiers of education. The model integrates private education decisions by allowing parents, who are differentiated according to income and human capital, to top up public expenditures with private transfers. We identify four groups of households with conflicting preferences over the the size of the public education budget and its allocation. In equilibrium, public education budget, private expenditures and expenditure allocation among different tiers of education, depend on which group of households is in power and on country-specific features such as income inequality and intergenerational persistence in education. By running a cluster analysis on 32 OECD countries, we seek to establish if distinctive ‘education regimes’, akin to those identified in the theoretical analysis, could be discerned. Our main finding is that a high intergenerational persistence in education might foster the establishment of education regimes in which the size and the allocation of the public budget among different tiers of education prevent a stable and significant increase of the population graduation rate, thus plunging the country in a ‘low education’ trap.

Keywords: Education expenditures; Individual preferences; Income inequality; Redistribution; Intergenerational mobility in education; Political economy (search for similar items in EconPapers)
JEL-codes: H23 H26 H42 H52 I28 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s40797-021-00157-0

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