Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform

Raquel Fernández, Richard Rogerson

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Many states are implementing school-finance reforms which will have complex effects on income distribution, intergenerational income mobility, and welfare. This paper analyzes the static and dynamic effects of such reforms by constructing a dynamic general equilibrium model of public-education provision and calibrating it using U.S. data. We examine the consequences of a reform of a locally financed system to a state-financed system which equalizes expenditures per student across districts. We find that this policy increases both average income and the share of income spent on education. Steady-state welfare increases by 3.2 percent of steady-state income.

    Original languageEnglish (US)
    Pages (from-to)813-833
    Number of pages21
    JournalAmerican Economic Review
    Volume88
    Issue number4
    StatePublished - Sep 1998

    ASJC Scopus subject areas

    • Economics and Econometrics

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