Education Inequality among Different Social Groups

Abstract

In this paper, we examine an education-planning problem by using a mechanism design approach. We consider a model where agents have different abilities in acquiring education and belong to different social groups (for instance, races or genders). Under the information constraint that the abilities of agents are observable and group memberships are unobservable, the social planner constructs direct mechanisms to determine the education levels of agents and to distribute income transfers and schooling help. We compare two sets of education policies derived under Rawlsian and utilitarian social welfare functions. Our main findings are as follows. First, under education policies obtained from the utilitarian social welfare function, agents with the same ability are equally treated, regardless of group membership. In contrast, education policies obtained from the Rawlsian social welfare function lead to a form of reverse discrimination in the sense that agents in a more disadvantaged social group achieve higher levels of education.