Educational system, income inequality and growth: the median voter's decision

Abstract

I analyze a long run educational policy as a mechanism to close the income gap among low, median and high-income families. If the choice is made endogenous by the use of the median voter theorem, the results are as follow: i) public education system guarantees income convergence, however the income growth rate of the median voter is smaller; ii) the combination public and private (hybrid) educational system allows faster income growth rate, but income inequality is almost the natural outcome. The ending result is that the combination public and private system will prevail, since the income growth rate of the median voter is higher in this system. This might explain the persistence and differences of income inequality among the economies.