Public School Finance in a General Equilibrium Tiebout World: Equalization Programs, Peer Effects and Private School Vouchers

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1996-06

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Abstract

This paper uses computable general equilibrium simulations to investigate the effect of private school vouchers. It improves on past computational approaches by (i) endogenizing the funding of public schools through the modelling of an explicit political process at the school district level; (ii) embedding the private/public school choice in a Tiebout model in which agents also choose between communities that provide different public school/property tax packages; and (iii) allowing for a variety of different public school financing mechanisms ranging from purely local financing and control all the way to pure state funding. While voucher programs are shown to increase school-based stratification of agents, they tend to decrease residence-based stratification. This implies that untargeted vouchers may be equity-enhancing under some institutional settings even when there are no direct improvements in public school efficiency from increased competition. Furthermore, the effects of targeting vouchers to low income districts may not differ significantly from the effects of untargeted voucher plans.

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Nechyba

Thomas J. Nechyba

Professor of Economics

Professor Nechyba conducts his research within the fields of public finance, fiscal federalism, and the economics of education. His studies tend toward the investigation of function within local governments, public policy issues concerning disadvantaged families, and the economics behind primary and secondary education. He received funding for one of his latest projects, “An Empirical Investigation of Peer Effects in Schools and of Household Responses to School Policy Changes,” from a National Science Foundation grant. He also received support from the Lincoln Institute for Land Policy for his work, “Urban Sprawl;” from the Spencer Foundation for his study on, “The Role of Peers, Parental Choices, and Neighborhoods;” from the New Zealand Ministry of Education for a study on, “The Impact of Family and Community Resources on Education Outcomes;” and the Hoover Institution for the study, “The Implications of New Federalism.” He also received monetary support from the National Academy of Sciences for his investigation of the fiscal impact of immigrants, and from the Center for Economic Policy Research for various projects concerning education and welfare policy. In addition to his individual research pursuits, Professor Nechyba is also a Research Associate at the National Bureau of Economic Research.


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