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EDUCATION VOUCHERS, GROWTH, AND INCOME INEQUALITY

Published online by Cambridge University Press:  01 February 2005

BULY A. CARDAK
BULY A. CARDAK
Affiliation:
La Trobe University
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Abstract

This paper studies a growth model with public and private education alternatives. The impact of education vouchers on economic growth and the evolution of income inequality are considered. Results indicate that introducing education vouchers can increase economic growth. Households switching from public to private education experience higher incomes. This raises the tax base, in turn raising public education expenditures and growth of the whole economy. Vouchers are found to generally increase income inequality. Welfare comparisons show that voucher schemes may in some cases gain majority support, depending on assumptions and parameters. The results add a new dimension on which vouchers can be evaluated in the continuing policy debate.

Keywords

Education ChoiceGrowthIncome DistributionVouchers
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 9 , Issue 1 , February 2005 , pp. 98 - 121
Copyright
© 2005 Cambridge University Press

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