Abstract
This study presents a two-class successive generations model with human capital accumulation and the choice to opt out of public education. The model demonstrates the mutual interaction between inequality and education choice and shows that this interaction leads to two locally stable steady-state equilibria. The existence of multiple stable equilibria implies a negative association between inequality and public education enrollment, which is consistent with evidence from Organisation for Economic Co-operation and Development (OECD) countries. This study also presents a welfare analysis using data from OECD countries and shows that introducing a compulsory public education system leaves the first generation worse off, although it realizes an equal society and improves welfare for future generations of lower-class individuals.
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