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Inequality, Educational Choice and Public School Quality in Income Mixing Communities

Paolo Melindi-Ghidi ()

No 1629, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: Why, in some urban communities, do rich and poor households cohabit while, in others, we observe sorting by income? To answer this question I develop a two-community general equilibrium framework of school quality, residential choice and tax decision with probabilistic voting. The model predicts that in highly unequal societies in which households segregate by schooling, low- and high-income households choose to live in the same community. When there is less inequality, we observe the typical sorting by income across communities. The theoretical model suggests that the effect of inequality on the quality of public schooling is ambiguous and depends on the relative endowments of housing in the two communities. When inequality increases, if housing in the community where rich and poor households cohabit is affordable, then an inflow of high-income middle class households towards this community emerges. As a consequence, inequality negatively impacts the quality of public schooling due to an ends-against-the-middle coalition that pushes tax rates down.

Keywords: Inequality; probabilistic voting; segregation; income mixing equilibrium (search for similar items in EconPapers)
JEL-codes: D72 I24 I28 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-edu and nep-ure
Date: 2016-10
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Related works:
Journal Article: Inequality, educational choice, and public school quality in income‐mixing communities (2018) Downloads
Working Paper: Inequality, educational choice, and public school quality in income‐mixing communities (2018)
Working Paper: Inequality, Educational Choice and Public School Quality in Income Mixing Communities (2016) Downloads
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