Review of Economic Studies
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Выпуски:
Опубликовано на портале: 14-11-2003
Gianni De Fraja
Review of Economic Studies.
2002.
Vol. 69.
No. 2.
P. 437-466.
This paper studies the education policy chosen by a utilitarian government. In the
model, households differ in their income and in their children’s ability; income
is observed by the government, but ability is private information. Households can
use private education, but cannot borrow to finance it. The government can finance
education with income tax, but at the cost of blunting the individuals’ incentive
to exert labour market effort. The optimal education policy we derive is elitist:
it increases the spread between the educational achievement of the bright and the
less bright individuals, compared to private provision. It is also such that the
education received by less bright individuals depends positively on their parental
income. Finally, the optimal education policy is input regressive, in the sense of
Arrow (1971, Quarterly Journal of Economics, 38, 175–208): households with
higher income and brighter children contribute less in tuition fees towards the cost
of the education system than households with lower income and less bright children.

