Abstract
This paper examines the state funding of higher education, treated as an investment good generating an externality, under majority voting. The model considers a single cohort over two periods. Individuals maximise net lifetime income subject to the government's budget constraint. With a proportional tax, cyclical voting does not occur despite double-peaked preferences. Comparative static results are obtained. A fall in non-education expenditure leads to a fall in the choice of grant and a positive externality is a necessary though not sufficient condition for ensuring majority support for some positive level of the grant.
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