Government Expenditure on the Public Education System / Chao Fu, Shoya Ishimaru, John Kennan.

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Fu, Chao

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w26425.Publication details: Cambridge, Mass. National Bureau of Economic Research 2019.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We investigate equilibrium impacts of federal policies such as free-college proposals, taking into account that human capital production is cumulative and that state governments have resource constraints. In the model, a state government cares about household welfare and aggregate educational attainment. Realizing that household choices vary with its decisions, the government chooses income tax rates, per-student expenditure levels on public K-12 and college education, college tuition and the provision of other public goods, subject to its budget constraint. We estimate the model using data from the U.S. Using counterfactual simulations, we find that free-public-college policies, mandatory or subsidized, would decrease state expenditure on and hence the quality of public education. More students would obtain college degrees due to increased enrollment. Over 86% of all households would lose while about 60% of the lowest income quintile would gain from such policies.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w26425 (Browse shelf(Opens below))	Not For Loan

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November 2019.

We investigate equilibrium impacts of federal policies such as free-college proposals, taking into account that human capital production is cumulative and that state governments have resource constraints. In the model, a state government cares about household welfare and aggregate educational attainment. Realizing that household choices vary with its decisions, the government chooses income tax rates, per-student expenditure levels on public K-12 and college education, college tuition and the provision of other public goods, subject to its budget constraint. We estimate the model using data from the U.S. Using counterfactual simulations, we find that free-public-college policies, mandatory or subsidized, would decrease state expenditure on and hence the quality of public education. More students would obtain college degrees due to increased enrollment. Over 86% of all households would lose while about 60% of the lowest income quintile would gain from such policies.