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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-Rev., Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This study presents a two-class, successive generations model with human capi- tal 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 indi- viduals in a lower class. 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-edu and nep-pbe
Date: 2016-05, Revised 2017-01
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Working Paper: Inequality and Education Choice (2016)
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