Department of Economics

A Dynamic General Equilibrium Analysis of the Political Economy of Public Education

Department of Economics

University of Delaware

Working Paper #2005-05

A Dynamic General Equilibrium Analysis of the Political Economy of Public Education.

Jorge Soares

ABSTRACT

The primary objective of this paper is to highlight the distinct roles of altruism and of self-interest in the political determination of a public education policy. I assess the relative importance of three factors in the determination of the equilibrium level of this policy: altruism, the impact of public funding of education on social security benefits and its impact on factor prices. I then focus on the impact of implementing a social security system on the equilibrium levels of education funding and on welfare. I find that although, in the benchmark economy, the presence of social security might generate support for public funding of education, its overall effect on the well-being of individuals is negative for any level of social security taxation.
 

JEL Classification: D78, E62, I22.
Key words: Public Education, Voting, General Equilibrium.

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