International Tax and Public Finance

, Volume 15, Issue 3, pp 338–352 | Cite as

Central versus local education finance: a political economy approach



This paper models voters’ preferences over central versus local education policies when there are private alternatives. Education is financed by income taxes and individuals are mobile between communities. Public education levels are chosen by majority vote. Contrary to conventional wisdom, centralisation may benefit the rich and poor, while the middle class prefer decentralised education. The model is also extended to include peer effects. Peer effects increase the support for central school finance, even in the community with good public schools.


Education Centralisation Private schools Majority voting 


I22 H72 D72 


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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of MunichMunichGermany

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