Efficiency and Equity in Public Education Expenditures
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.
KeywordsHuman Capital Social Welfare Function Distributional Issue Marginal Cost Price Inequality Aversion
Unable to display preview. Download preview PDF.
- Amir, Shmuel, ‘Earned Income of Male Employees in Israel, 1968/69’ (Jerusalem, 1974). Draft in Hebrew.Google Scholar
- Atkinson, Anthony B., ‘How Progressive Should Income Tax Be?’, in Essays on Modern Economics, ed. J. M. Parkin (London: Longman, 1973), pp. 90–109.Google Scholar
- Becker, Gary S., Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, National Bureau of Economic Research: General Series no. 80 (New York and London: Columbia University Press, 1964).Google Scholar
- De Wolff, P., and Van Slijpe, A. R. D., ‘Relation between Income, Intelligence, Education and Social Background’, European Economic Review, no. 4, 1973.Google Scholar
- Hause, John C, ‘Earnings Profile: Ability and Schooling’, in Investment in Education: The Equity-Efficiency Quandary, ed. Theodore W. Schultz (Chicago: Chicago University Press, 1972). Also appeared in Journal of Political Economy, LXXX, no. 3, part II (May–June 1972), pp. S109–38.Google Scholar
- Mincer, Jacob, Schooling, Experience, and Earnings, National Bureau of Economic Research: ‘Human Behavior and Social Institution’, no. 2. (New York and London: Columbia University Press, 1974).Google Scholar
- Schultz, Theodore W. (ed.): (see reference under Hause, John C.Google Scholar