Cost Efficiency and Feasibility of Education Policy in the Presence of Local Social Externalities

Vincent Vandenberghe

No 1999021, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper is a theoretical exercise aimed at developing an economic analysis of an education system in which the educational output - apart from each individual's propensity to invest in himself or the level of per-pupil spending - is heavily conditioned by the way non-monetary inputs (peer effects operating as local social spillovers) are allocated between schools. Our model actually stresses the influence peer effects can exert on the monetary cost of a policy aimed at equalizing achievement. Unequal allocation of these non-purchasable inputs will cause unequal monetary input requirements and under some realistic assumptions we show here that the best way to ensure cost efficiency is to achieve an equalitarian allocation of peer effects (perfect desegregation according to ability level). But the implementation of such a policy raises many difficulties. To get particular families to voluntarily send their offspring to desegregated schools might require some form of bribery.

Keywords: Education: Government Policy; Externalities; Cost-Benefit Analysis (search for similar items in EconPapers)
JEL-codes: D61 D62 H52 I28 (search for similar items in EconPapers)
Pages: 19
Date: 1999-06-01
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1999021

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