a dynamic tiebout theory of voluntary vs involuntary provision of public goods this paper considers a dynamic model of tiebout like migration between communities that utilize distinct allocation procedures for public goods at issue is whether voluntary or compulsory procedures are more likely to prevail over time we model infinitely lived individuals who make repeated sequential location decisions over one of two communities each community uses a distinct mechanism for allocating public goods the first is one in which contributions are given voluntarily by the citizenry of the community the second is a compulsory scheme by which individuals are taxed proportionately to wealth with the tax determined by a majority vote opportunities to accumulate wealth exist via accumulation of public capital the markov perfect equilibria of the dynamic game are studied our main result shows that when accumulated wealth converges to a steady state individuals locational choices eventually select the involuntary provision mechanism this holds despite the fact that unanimous location in the voluntary provision community may in many cases remain as a nash equilibrium of the static game each period we also describe conditions under which voluntary provision survives these conditions require that accumulation of capital fails to decrease wealth dispersion over time the results are shown to be consistent with findings relating inequality to school choice

preserving religious identity through education economic analysis and evidence from the us abstract this paper models the decision of religious parents to send their children to private religious schools as reflecting their desire to shield their children from external influences and thus preserve their religious identity it follows that when the share of the minority in the local population grows and outside influences become less threatening the demand for separate religious schooling among the members of the religious group decreases this pattern implies concavity in the relationship between enrollment in private and religious schooling and the share of the religious group in the population we present empirical evidence from united states county data on catholic and private school enrollment that strongly supports our theory the paper contributes to a better understanding of the demand for religious education

why do different countries choose a different public private mix of educational services we observe a wide range across countries in the percentage of total enrollments that attend private rather than public schools this paper seeks to explain 1 the systematically higher proportion of private enrollments pvt in developing as compared with developed countries at the secondary level and 2 the seemingly random variation across countries within a given level of education and stage of development i argue that the latter is due to differentiated demand and nonprofit supply both of which stem from cultural heterogeneity especially religious heterogeneity in contrast the large pvt at the secondary level in developing countries is hypothesized to stem from limited public spending which creates an excess demand from people who would prefer to use the public schools but are involuntarily excluded and pushed into the private sector the limited public spending on secondary education in turn is modelled as a collective decision which is strongly influenced by the

immigration public education spending and private schooling this article examines the impact of immigration on private school enrollment through the mechanism of public education spending it finds that the immigrant share of population raises private school enrollment across countries by leading to a decrease in the share of public education spending the decrease is driven by responses to immigrants from culturally similar and developed countries this suggests that the role of public schools in promoting social cohesion among diverse populations is weighted against other concerns in education funding decisions in places with immigrant populations the endogeneity of immigrant share is accounted for by using an instrument constructed from gravity model estimates

immigration redistribution and universal suffrage the effect of immigration on redistribution has been widely debated this paper contributes to this debate by testing two explanations which are that i immigration tends to reduce redistribution due to people s higher levels of xenophobia and that ii immigration affects redistribution because immigrants do not have the right to vote since the demand for redistribution depends on the expected gap between median voter income and mean income immigrants affect the demand for redistribution because as non citizens they do not change the median voter s income but as economic stakeholders they do affect the mean income four empirical consequences of i and ii are tested at the individual level evidence from the european values survey in 45 countries confirms ii showing that immigrants expected competitiveness on the labor market affects preferences for redistribution and that it is amplified when the perceived number of immigrants is high in contrast i is globally rejected since the impact of the citizens declared level of solidarity with immigrants tends to be weak and depends on the type of measurement or specification used

horizontalism a critique this article offers a critique of the horizontalist view of money that banks are passive in the face of credit demand it is argued that banks liquidity preference influences their responsiveness to the demand for credit their liquidity preference is expressed in risk assessment understood in terms of john maynard keynes s theory of uncertainty it is argued that rationing in the sense of adverse changes in risk assessment occurs systematically in the downturn of the business cycle systematic rationing also occurs with respect to particular classes of borrowers the focus here is on the case of small firms c 1996 academic press limited copyright 1996 by oxford university press

substitutes and stability for matching with contracts we consider the matching problem with contracts of hatfield and milgrom 2005 and we introduce new concepts of bilateral and unilateral substitutes we show that bilateral substitutes is a sucient condition for the existence of a stable allocation in this framework however the set of stable allocations does not form a lattice under this condition and there does not necessarily exist a doctor optimal stable allocation under a slightly stronger condition unilateral substitutes the set of stable allocations still does not necessarily form a lattice with respect to doctors preferences but there does exist a doctor optimal stable allocation and other key results such as incentive compatibility and the rural hospitals theorem are recovered

municipal government approaches to service delivery an analysis from a transactions cost perspective municipal governments are less likely to contract out for service delivery if citizen preferences for the service are heterogeneous this conclusion is based on an analysis that extends to the public sector the empirical industrial organization literature on transaction costs and the make or buy decision faced by private firms service delivery practices for sixty three municipal services are examined the findings are consistent with the proposition that the cost for writing and monitoring contracts may be an important consideration in municipal service delivery approach and that bureaucratic supply may not be as inefficient as some previous studies indicate

self interest and public funding of education abstract the objective of this paper is to study whether publicly funded education can emerge as a political and economic equilibrium in an overlapping generations economy in which selfish agents vote for public funding of education the presence of complementarities between capital and labor in the production function implies that by improving the skills of next period s workers public funding of education increases the return on capital as a result savers will support a publicly financed education system in order to enhance their future income a version of the model calibrated using u s data generates large shares of gnp allocated to education hence the non altruistic incentive to support public education is quantitatively important

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

the law of aggregate demand and welfare in the two sided matching market abstract in the college admission problem we show that the student optimal stable matching is weakly pareto optimal for students if colleges preferences satisfy substitutability and the law of aggregate demand we also show that both of these properties are important for the result

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

group incentive compatibility for matching with contracts abstract hatfield and milgrom hatfield john william milgrom paul r 2005 matching with contracts amer econ rev 95 913 935 present a unified model of matching with contracts which includes the standard two sided matching and some package auction models as special cases they show that the doctor optimal stable mechanism is strategy proof for doctors if hospitals preferences satisfy substitutes and the law of aggregate demand we show that the doctor optimal stable mechanism is group strategy proof for doctors under these same conditions that is no group of doctors can make each of its members strictly better off by jointly misreporting their preferences we derive as a corollary of this result that no individually rational allocation is preferred by all the doctors to the doctor optimal stable allocation

has government any role in money abstract recent interest in monetary reform has been sparked by the emergence of a world irredeemable paper money system in light of this interest we review the current validity of four good reasons friedman advanced in 1960 to rationalize government intervention we conclude that the forces that produced government involvement in the past will persist deregulation of financial intermediaries is desirable on grounds of market efficiency though it is an open question whether government should continue as lender of last resort we expect that the present world fiat money standard will neither degenerate into hyperinflation nor revert to a commodity standard

the state socialization and private schooling when will governments support alternative producers abstractunderstanding the institutional features that can improve learning outcomes and reduce inequality is a top priority for international and development organisations around the world economists appear to have a good case for support to non governmental alternatives as suppliers of schooling however unlike other policy domains freer international trade or privatisation economists have been remarkably unsuccessful in promoting the adoption of this idea we develop a general positive model of why governments typically produce schooling which introduces the key notion of the lack of verifiability of socialisation and instruction of beliefs which makes third party contracting for socialisation problematic we use the model to explain variations around the world in levels of private schooling we also predict the circumstances in which efforts to promote the different alternatives to government production like charter voucher and scholarship are likely to be successful

the characteristics of a monetary economy a keynes schumpeter approach mainstream monetary theory considers money only as an instrument meant to facilitate trading without having any effect on income or on the evolution of the economic system the aim of this paper is to elaborate a monetary theory capable of supporting the thesis of money non neutrality based on the arguments developed by keynes and schumpeter the synthesis of the theories of these two great economists will be formulated starting from the two points which are common in the views of keynes and schumpeter first in contrast with mainstream theory keynes and schumpeter state that the diffusion of a fiat money induces a radical modification into the way in which the economic system works second when keynes and schumpeter describe the reasons why money and financial aggregates are not neutral they highlight the fundamental role of the credit market and of banks in contrast with the mainstream theory they do not consider the credit market as the mirror image of the goods market

theoretical reflections on endogenous money the problem with convenience lending this paper questions the practice of representing the endogenous money supply by means of a horizontal money supply curve implicitly contrasted with the conventional vertical stock supply curve what is drawn as a horizontal curve is strictly a locus between a continually shifting stock curve and a shifting demand curve consequently demand for money considerations have been suppressed in the horizontal presentation one response is that the resulting deposits are automatically held through some process such as convenience lending however the argument behind convenience lending points to the conclusion that it is changes in relative interest rates that reconcile the demand for additional loans with the demand for additional deposits c 1996 academic press limited copyright 1996 by oxford university press

to segregate or to integrate education politics and democracy how is the quality of public education affected by the presence of private schools for the rich theory and evidence suggest that the link depends crucially on the political system we develop a theory that integrates private education and fertility decisions with voting on public schooling expenditures we find that the presence of a large private education sector benefits public schools in a broad based democracy where politicians are responsive to low income families but crowds out public education spending in a society that is politically dominated by the rich the main predictions of the theory are consistent with state level data and micro data from the u s as well as cross country evidence from the programme for international student assessment study

an explanation for public provision of schooling the importance of indoctrination this article was completed while i was a national fellow at the hoover institution and represents the unpublished theory and cross country empirical sections from my 1984 university of california los angeles dissertation armen alchian harold demsetz gertrud fremling david friedman robert hansen ben klein ed lazear russell roberts finis welch e g west an unusually helpful anonymous referee from this journal and the participants in seminars at auburn university the university of california at los angeles and at davis california state university at hayward and northridge the hoover institution george mason university the university of houston southern methodist university the u s department of education texas a m university and the 1987 public choice meetings in tucson arizona provided valuable discussions i would like to thank maury pearl for very helpful research assistance any remaining errors are of course my responsibility

matching with contracts we develop a model of matching with contracts which incorporates as special cases the college admissions problem the kelso crawford labor market matching model and ascending package auctions we introduce a new law of aggregate demand for the case of discrete heterogeneous workers and show that when workers are substitutes this law is satisfied by profit maximizing firms when workers are substitutes and the law is satisfied truthful reporting is a dominant strategy for workers in a worker offering auction matching algorithm we also parameterize a large class of preferences satisfying the two conditions

ethnic diversity public spending and individual support for the welfare state a review of the empirical literature we review the empirical literature that studies the effect of ethnic diversity on public spending and on individual support for the welfare state the survey puts a particular focus on the fast growing literature that uses experiments to study the effects of ethnic diversity many of these studies have appeared since the pioneering survey by alesina and la ferrara and have not been covered by a survey before

causality and interdependence in pasinetti s works and in the modern classical approach the formal representation of economic theories normally takes the form of a model that is a system of equations which connect the endogenous variables with the values of the parameters which are taken as given sometimes it is possible to identify one or more equations which are able to determine a subset of endogenous variables priorly and independently of the other equations and of the value taken by the remaining variables of the system the first group of equations and variables are thus said to determine causally the remaining variables in pasinetti s works this notion of causality has often been emphasized as a formal property having the burden to convey some deep economic meaning in this work we will go through those pasinetti s works where this notion of causality plays a central role with the purpose to contextualize it within the econometric debate of the sixties to enucleate its economic meaning and to show its connections with other fields of the modern classical approach

vouchers for private schooling in colombia evidence from a randomized natural experiment colombia used lotteries to distribute vouchers which partially covered the cost of private secondary school for students who maintained satisfactory academic progress three years after the lotteries winners were about 10 percentage points more likely to have finished 8th grade primarily because they were less likely to repeat grades and scored 0 2 standard deviations higher on achievement tests there is some evidence that winners worked less than losers and were less likely to marry or cohabit as teenagers benefits to participants likely exceeded the 24 per winner additional cost to the government of supplying vouchers instead of public school places

human capital social capital and public schooling abstract public education contributes to growth not only by building human capital but also by instilling common norms that increase social cohesion this is modeled in the context of a political economy framework in which social cohesion reduces wasteful rent seeking and thus strengthens incentives for investment in human captial the political decisions that determine whether different social groups retain separate schooling systems or adopt an integrated system weigh these material advantages against the psychic cost to parents of alienating their children from traditional values this aspect of public education helps explain why commonly education is publicly administered as well as publicly financed

private schools in a global world globalization is a popular term that to economists describes the effects of diminished costs to trade around the world the technological revolution of the past two decades lowered barriers to trade in the financial sector as well as in the goods and services sectors as a result we routinely consume products from china india or latin america and these and other countries likewise consume goods and services from us many argue that a by product of the technological revolution is the loss of country and regional cultural identity we find mcdonald s and starbucks in seattle washington beijing china and small towns around the globe others argue that this simply implies wider choice of goods and of cultural identities as economists think about globalization we attribute these changes to efficiency in the marketplace the technological advances have enabled countries to export those goods and services for which they have a comparative advantage and the gains from trade have resulted in increased economic growth worldwide while we see the benefits from the enhanced flow of goods and services across markets economists have paid less attention to the nonmarket aspects of globalization the increased flow of information and people across national boundaries implies increased competition across all sectors of the economy similar to the market for goods and services the political institutions that survive the competitive race in the long run presumably will be those that enhance efficiency this is not to intimate that political systems will replicate the efficiency of the marketplace but to suggest that competitive forces tend to lead to more efficient structures and ultimately toward more efficient outcomes as these public administrative institutions become more competitive politics should play a diminished role and economic efficiency should play an even greater role in future structures if globalization ultimately leads to more efficient institutions the value of examining current international differences in institutional structures is immense through understanding past and current differences we gain insight into our future today i want to examine one specific institution within this context private provision of elementary and secondary schooling i want to examine private schooling by exploring the institutions that govern the provision of private schooling the role of politics and economics in the evolution of these institutions and finally the efficiency implications of the various institutional arrangements at each step in this examination i shall be assessing the role that globalization has played and is expected to play in the delivery of schooling around the world 1 private provision around the worldeconomists have studied education since the days of adam smith we have estimated the demand for schooling provided normative assessments of the role of the state in education examined the effects of public expenditures for education on housing markets estimated the returns to schooling and estimated the relationship between public schooling and economic development but most of all economists have estimated education production functions that relate public sector inputs such as per pupil expenditures pupil teacher ratios or teacher salaries to educational achievement and as last year s southern economic association distinguished guest lecturer so eloquently demonstrated economists policymakers and the public have been sorely perplexed by the lack of positive association between these inputs and the achievement of public school students hoxby 2004 the private side of schooling has received increasing attention from economists as data have become more available james 1993 private schooling occupies a significantly smaller sector of the economy in the united states than does public schooling according to unesco 2000 data approximately 12 of students enrolled in primary schools in this country attend private schools

educational systems growth and income distribution a quantitative study this study sets out to develop a dynamic model within an economy characterized by the coexistence of public and private schools under imperfect credit market conditions in an attempt to provide a clearer understanding of the evolution of economic growth and income inequality we find that any government wishing to reduce income inequality should adopt policies aimed at increasing the enrollment rate in public schools however whilst high enrollment rates can be sustained in private schools and thus create enhanced economic growth this can only occur if accompanied by the liberalization of the credit markets