Abstract
The equilibrium distribution of schooling is studied when individuals differing in their natural endowments (n) decide on their schooling (S) on the basis of lifetime net earnings (I). The government affects the latter through the price of tuition and a given tax on earnings. The existence of positive interaction between S and n in earnings and a negative interaction on the resource-cost side makes for a strong positive correlation between the distributions ofn and S, and a regressive tuition fee under pure efficiency. Social welfare objectives will modify this relationship in the direction of a more egalitarian S and I distribution, and the trade-off is quantifiable. A tentative numerical example based on Israeli data is given at the end.
I am indebted to A. Atkinson, Y. Ben-Porath, S. Colm, R. Gronau, R. Klinov-Malul, U. Litvin and the conference participants for helpful comments on an earlier draft.
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References
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© 1977 International Economic Association
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Bruno, M. (1977). Efficiency and Equity in Public Education Expenditures. In: Feldstein, M.S., Inman, R.P. (eds) The Economics of Public Services. International Economic Association Conference Volumes. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-02917-4_3
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DOI: https://doi.org/10.1007/978-1-349-02917-4_3
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