TY  - JOUR
AU  - Fernandez,Raquel
AU  - Rogerson,Richard
TI  - Income Distribution and Public Education: A Dynamic Quantitative        Evaluation of School Finance Reform
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4883
PY  - 1994
Y2  - October 1994
UR  - http://www.nber.org/papers/w4883
L1  - http://www.nber.org/papers/w4883.pdf
N1  - Author contact info:
Raquel Fernández
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8908
Fax: 212/995-4186
E-Mail: raquel.fernandez@nyu.edu

Richard Rogerson
Woodrow Wilson School of
  Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu
AB  - Many states have or are considering implementing school finance reforms aimed at lessening inequality in the provision of public education across communities.  These reforms will tend to have complicated aggregate effects on income distribution, intergenerational income mobility, and welfare.  In order to analyze the potential effects of such reforms, this paper constructs a dynamic general equilibrium model of public education provision, calibrates it using US data, and examines the quantitative effects of a major school finance reform.  The policy reform examined is a change from a system of pure local finance to one in which all funding is done at the federal level and expenditures per student are equal across communities.  We find that this policy increases average income and total spending on education as a fraction of income.  Moreover, there are large welfare gains associated with this policy; steady-state welfare increases by 3.2% of steady-state income.
ER  -