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  4. Fall 1996
  5. Are Efficiency and Equity in School Finance Substitutes or Complements?

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Are Efficiency and Equity in School Finance Substitutes or Complements?

  • Caroline Minter Hoxby
Journal of Economic Perspectives
vol. 10, no. 4, Fall 1996
(pp. 51–72)
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Abstract

This paper analyzes cases made for local and centralized school finance and policies such as vouchers, categorical aid, and equalization aid. An ideal system of school finance would achieve efficiency and equity by ensuring every person invests in the amount of schooling that is socially optimal for him. The author evaluates the empirical evidence for, and the merit and importance of, arguments for each policy. She concludes that the theoretical arguments for centralized finance not only exaggerate the efficiency-equity tradeoff but actually make better arguments for a system combining local school finance with categorical aid and means-tested vouchers.

Citation

Hoxby, Caroline Minter. 1996. "Are Efficiency and Equity in School Finance Substitutes or Complements?" Journal of Economic Perspectives, 10 (4): 51–72. DOI: 10.1257/jep.10.4.51

JEL Classification

  • I22 Educational Finance
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