Education Choice, Neoclassical Growth and Class Structure

The evolution of income distribution is studied in a dynamic model of education choice. In this model, both public and private education are available. Public education is financed using a tax rate determined by majority voting. The analysis focuses on neoclassical growth in order to ensure tractability in identifying a steady state. The steady state income distribution is found to be bimodal. Public education offers higher growth to the poor in the transition to the steady state, however public education students converge to the lower mode of the income distribution. Under some conditions, universal public education offers steads state human capital superior to that available to any student in the mixed education model considered, while universal private education unconditionally offers steady state human capital superior to that of the mixed model.