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Inequality and Education Choice

Tetsuo Ono () and Yuki Uchida ()
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Yuki Uchida: Graduate School of Economics, Osaka University

No 16-17, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This study presents a two-class, overlapping-generations model with human cap- ital accumulation and the choice to opt out of public education. The model demon- strates the mutual interaction between inequality and education choice and shows that the interaction leads to two, locally stable steady-state equilibria. The exis- tence of multiple stable equilibria implies a negative correlation between inequality and enrollment in public education, which is consistent with evidence from OECD countries. This study also presents a welfare analysis using data from OECD coun- tries and shows that introducing a compulsory public education system leaves the rst generation worse off, though improves welfare for future generations of the lower-class individuals. The results also suggest that the two equilibria are not Pareto-ranked.

Keywords: Public education; opting out; inequality (search for similar items in EconPapers)
JEL-codes: D70 H52 I24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-edu
Date: 2016-05
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Working Paper: Inequality and education choice (2019) Downloads
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