The political economy of public spending on education, inequality, and growth

Mark Gradstein

No 3162, Policy Research Working Paper Series from The World Bank

Abstract: Public provision of education has often been perceived as universal and egalitarian, but in reality it is not. Political pressure typically results in incidence bias in favor of the rich. The author argues that the bias in political influence resulting from extreme income inequalities is particularly likely to generate an incidence bias, which we call social exclusion. This may then lead to a feedback mechanism whereby inequality in the incidence of public spending on education breeds higher income inequality, thus generating multiple equilibria: with social exclusion and high inequality; and with social inclusion and relatively low inequality. The author also shows that the latter equilibrium leads to higher long-run growth than the former. An extension of the basic model reveals that spillover effects among members of social groups differentiated by race or ethnicity may reinforce the support for social exclusion.

Keywords: Public Health Promotion; Environmental Economics&Policies; Decentralization; Economic Theory&Research; Health Monitoring&Evaluation; Inequality; Poverty Assessment; Governance Indicators; Achieving Shared Growth; Economic Theory&Research (search for similar items in EconPapers)
Date: 2003-11-01
New Economics Papers: this item is included in nep-dev, nep-pke, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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