EDUCATIONAL VOUCHERS AND CREAM SKIMMING* |
| |
| Authors: | Dennis Epple Richard Romano |
| |
| Institution: | 1. We thank Roland Benabou, Jonathan Hamilton, David Sappington, Victor Rios‐Rull, coeditor of International Economic Review, an anonymous referee, and workshop participants at the 1998 NBER Summer Institute, the MacArthur/Brookings Seminar, Cornell University, Johns Hopkins University, Princeton University, Stanford University, the University of British Columbia, the University of California at Los Angeles, the University of Kentucky, and the University of Pittsburgh for comments, and the National Science Foundation and MacArthur Foundation for support. Please address correspondence to: Richard Romano, Department of Economics, University of Florida, Gainesville, FL 32611‐7140, U.S.A. E‐mail: .;2. Carnegie Mellon University and National Bureau of Economic Research, USA;3. University of Florida, USA |
| |
| Abstract: | Epple and Romano (1998) show equilibrium provision of education by public and private schools has the latter skim off the wealthiest and most‐able students, and universal vouchers lead to further cream skimming. Here we study voucher design that injects private‐school competition and increases technical efficiencies without cream skimming. Conditioning vouchers on student ability without restriction on participating schools' policies fails to affect significantly cream skimming. However, by adding restrictions like tuition constraints, such vouchers can reap the benefits of school competition without increased stratification. This is accomplished while allowing voluntary participation in the voucher system and without tax increases. |
| |
| Keywords: | |
|
|
