Education finance reform: A dynamic perspective

Raquel Fernandez, Richard Rogerson

    Research output: Contribution to journalArticlepeer-review


    We use a dynamic Tiebout model to analyze the consequences of moving from a pure local system of education finance to a pure state system of finance in which each student receives the same resources. While much of the education finance literature focuses on the static or immediate effects of such a change, our analysis also examines the dynamic effects. Numerical simulations for a calibrated version of our model indicate that these dynamic effects are very important. Comparing steady states, we find that aggregate welfare increases on the order of 10 percent following the switch to a state system. The key to this welfare gain is that a local system yields inefficiently low investment in human capital of children from low-income families.

    Original languageEnglish (US)
    Pages (from-to)67-84
    Number of pages18
    JournalJournal of Policy Analysis and Management
    Issue number1
    StatePublished - 1997

    ASJC Scopus subject areas

    • General Business, Management and Accounting
    • Sociology and Political Science
    • Public Administration


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