CHAPTER 7

Education

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

7-2

Real Annual Expenditure Per Pupil in Public Elementary and Secondary Schools

Source: US Bureau of the Census [2009, p. 151]

7-3

Justifying Government Intervention in Education

• Is Education a Public Good?

• Does Education Generate Positive Externalities?– The Conventional Wisdom– The Case Against the Conventional Wisdom– The Case of Higher Education

• Is the Education Market Inequitable?– Commodity Egalitarianism

7-4

What Can Government Intervention in Education Accomplish?

• Should public education be free and compulsory?

• Should government produce public education?

7-5

Does Government Intervention Crowd Out Private Education?

Quantity of Education

Qua

ntity

of

all o

ther

goo

ds

A

B

i

e0ep

ii

x

Private School quantity of education

Public schooling “crowds out”

education

7-6

Does Government Intervention Crowd Out Private Education?

Quantity of Education

Qua

ntity

of

all o

ther

goo

ds

A

B

i

e0 ep

ii

x

Public schooling increases quantity of education

7-7

Does Government Intervention Crowd Out Private Education?

Quantity of Education

Qua

ntity

of

all o

ther

goo

ds

A

B

i

e0ep

ii

x

Public schooling does not increase

quantity of education

7-8

Does Government Spending Improve Educational Outcomes?

SOURCE: Organization for Economic Cooperation and Development [2007a].

Real Annual Expenditures on Private and Public Schools, All Levels of Education (2007)

7-9

Does Government Spending Improve Educational Outcomes?

• Comparative educational outcomes

• Empirical Evidence: Does Spending on Education Improve Student Test Scores?

7-10

Public Spending and the Quality of Education

• Empirical Evidence: Does Reducing Class Size Improve Student Test Scores?– Measuring costs

– Measuring benefits

– Project STAR

– California

7-11

Does Education Increase Earnings?

• Link between higher spending on education and earnings

• Elementary and secondary education outcomes

• Influence of age and economic status

• Spending on the margin

7-12

New Directions for Public Education-Charter Schools

• Charter Schools - public schools operating under special state charters that permit experimentation and allow independence

• Empirical evidence– Diversity of choice– Student outcomes

7-13

New Directions for Public Education-Vouchers

• Vouchers – financial grants to families that can be used to pay their children’s tuition at (nearly) any school

• Argument in favor– Vouchers create competition in educational marketplace

• Arguments opposing– Parents might not be well-enough informed to make good choices

– Moving children to private schools might reduce positive externalities of education

– If good students escape bad schools, weaker students left behind may received even worse educations

– Inequitable

• Empirical evidence on the effect of vouchers

7-14

New Directions for Public Education-School Accountability

• School accountability – monitoring student and school performance via standardized tests

• No Child Left Behind Act (2001)

• Empirical evidence on the effectiveness of school accountability