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The distributional effects of education expenditures

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  • Biggs, Michael L.
  • Dutta, Jayasri

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.

Suggested Citation

  • Biggs, Michael L. & Dutta, Jayasri, 1999. "The distributional effects of education expenditures," National Institute Economic Review, National Institute of Economic and Social Research, vol. 169, pages 68-77, July.
    • Handle: RePEc:cup:nierev:v:169:y:1999:i::p:68-77_8
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