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Government Expenditure on the Public Education System

Author

Listed:
  • Chao Fu
  • Shoya Ishimaru
  • John Kennan
Abstract
We investigate equilibrium impacts of federal policies such as free‐college proposals, taking into account that human capital is cumulative and that state governments have resource constraints. In our model, a state government cares about household welfare and aggregate educational attainment. The government chooses income tax rates, per‐student expenditures on K‐12 and college education, college tuition, and the provision of other public goods. We estimate the model using U.S. data. Our simulations suggest that free‐college policies would decrease state expenditure on education. More students would obtain college degrees. Most households would “pay” for the free‐college policies through negative welfare effects.

Suggested Citation

  • Chao Fu & Shoya Ishimaru & John Kennan, 2024. "Government Expenditure on the Public Education System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 43-73, February.
    • Handle: RePEc:wly:iecrev:v:65:y:2024:i:1:p:43-73
    DOI: 10.1111/iere.12659
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    References listed on IDEAS

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    Cited by:

    1. Miller, Lois & Park, Minseon, 2022. "Making college affordable? The impacts of tuition freezes and caps," Economics of Education Review, Elsevier, vol. 89(C).
    2. Uta Bolt & Eric French & Jamie Hentall Maccuish & Cormac O’Dea, 2018. "Intergenerational Altruism and Transfers of Time and Money: A Life-cycle Perspective," Working Papers wp379, University of Michigan, Michigan Retirement Research Center.
    3. Dirk Krueger & Alexander Ludwig & Irina Popova, 2024. "Shaping Inequality and Intergenerational Persistence of Poverty: Free College or Better Schools," PIER Working Paper Archive 24-023, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    4. Ruhr, Lindsay R. & Jordan Fowler, Lindsey, 2022. "Empowerment-focused positive youth development programming for underprivileged youth in the Southern U.S.: A qualitative evaluation," Children and Youth Services Review, Elsevier, vol. 143(C).

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    More about this item

    JEL classification:

    • I00 - Health, Education, and Welfare - - General - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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