Equity and Resources: An Analysis of Education Finance Systems

Posted: 26 Aug 2003

See all articles by Raquel Fernández

Raquel Fernández

New York University - Leonard N. Stern School of Business, Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Richard Rogerson

Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER); Princeton University - Princeton School of Public and International Affairs

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Abstract

We analyze five education finance systems: local, state, foundation, power equalizing with recapture (PER), and power equalizing without recapture (PEN). In a calibrated model, we find that finance systems have large effects on educational resources and equity. The trade-off between equity and resources, however, is not monotone. Ranking systems by expected utility, we find that PER consistently ranks highest, though it provides fewer resources to education than the foundation and PEN systems and is less equitable than a state system. We prove that for an important subset of preferences, PER will win in majority voting comparisons with the other systems.

Suggested Citation

Fernández, Raquel and Rogerson, Richard, Equity and Resources: An Analysis of Education Finance Systems. Available at SSRN: https://ssrn.com/abstract=421507

Raquel Fernández (Contact Author)

New York University - Leonard N. Stern School of Business, Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Richard Rogerson

Arizona State University (ASU) - Economics Department ( email )

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National Bureau of Economic Research (NBER)

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Princeton University - Princeton School of Public and International Affairs ( email )

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