Educational vouchers, welfare effects, and voting

We analyze the welfare effects and voting equilibrium with vouchers for private schools. The analysis shows that vouchers, like tuition tax credits [Martinello and West (1988); Frey (1983)], may improve the welfare of all families, including families whose children remain in public schools, if public educational quality is unchanged and publicly-financed educational expenditures decrease. Thus, voters will approve a voucher only if it reduces taxes. When public educational quality is endogenous, a voucher may increase quality by reducing the tax cost of quality and will be approved if it reduce taxes at the pre-voucher public education level and increases quality. (C) 1998 Elsevier Science S.A.