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The distributional effects of education expenditures

Published online by Cambridge University Press:  26 March 2020

Michael L. Biggs  and
Jayasri Dutta
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Abstract

We evaluate the long-run distributional effects of cuts in the public expenditure on education. The article simulates a dynamic model of the earnings distribution. Earnings of individuals differ because of differences in innate ability, and additionally if their education levels differ. We model a dual system of education as in the UK or US, where the state finances public education by taxation. Parents may choose to educate their children privately by spending more. Using parameter values estimated by other researchers for the UK, we evaluate the likely long-run impact of changes to education expenditures. These estimates suggest that the long-run impact of modest changes to public education expenditures on the inequality of earnings are likely to be substantial.

Type
Articles
Information
National Institute Economic Review , Volume 169 , July 1999 , pp. 68 - 77
Copyright
Copyright © 1999 National Institute of Economic and Social Research

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Footnotes

We would like to thank Brenda Jennison for suggestions.

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