Abstract
We use an OLG model to examine democratic choice betweentwo modes of government support for education: subsidies forprivately purchased education and free uniform public provision.We find little conflict between democracy and growth: the samefactors that generate popular support for subsidization overfree uniform provision—large external benefits, a largeexcess burden, and little inequality—also favor its relativegrowth performance. Furthermore, restricting the franchise toan upper-income elite may also reduce growth. Two extensionsexamine the effect of intergenerational mobility and indicatethe theoretical possibility of periodic swings in the balancebetween public and private spending.
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Gradstein, M., Justman, M. Democratic Choice of an Education System: Implications for Growth and Income Distribution. Journal of Economic Growth 2, 169–183 (1997). https://doi.org/10.1023/A:1009781101707
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DOI: https://doi.org/10.1023/A:1009781101707