TY  - JOUR
AU  - Hanushek,Eric
AU  - Leung,Charles Ka Yui
AU  - Yilmaz,Kuzey
TI  - Redistribution through Education and Other Transfer Mechanisms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8588
PY  - 2001
Y2  - November 2001
UR  - http://www.nber.org/papers/w8588
L1  - http://www.nber.org/papers/w8588.pdf
N1  - Author contact info:
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA  94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu

Kuzey Yilmaz
University of Rochester
Rochester, NY 14627
E-Mail: kuyilmaz@hotmail.com
AB  - Educational subsidies are frequently justified as a method of altering the income distribution. It is thus natural to compare education to other tax-transfer schemes designed to achieve distributional objectives. While equity-efficiency trade-offs are frequently discussed, they are rarely explicitly treated.  This paper creates a general equilibrium model of school attendance, labor supply, wage determination, and aggregate production, which is used to compare alternative redistribution devices in terms of both deadweight loss and distributional outcomes. A wage subidy generally dominates tuition subsidies in ex ante (or 'opportunity') calculations, but this reverses in ex post (or 'realized') calculations.  Both are generally superior to a negative income tax. With externalities in production, however, there is an unambiguous role for governmental subsidy of education, because it both raises GDP and creates a more equal income distribution.
ER  -