Promoting education under distortionary taxation: equality of opportunity versus welfarism

Abstract

A common claim in the policy discourse is that a government wishing to achieve equality of opportunity should use public provision of education for equalisation of opportunities rather than income taxation, which only equalizes incomes. We develop a framework in which the tax and education provision rules in the welfarist and non-welfarist/equality of opportunity cases can be transparently compared. We show that in addition to education policies, progressive taxation also plays a role in achieving equality of opportunity, and illustrate how its use may differ under the two objectives. We also show how the provision of public education depends on how private education choices respond, potentially differentially by higherand lower-income families. Keywords Equality of opportunity • Income taxation • Inequality • Public good provisionThis paper is part of UNU-WIDER research programme on 'The Economics and Politics of Taxation and Social Protection'. We are grateful for useful comments to two anonymous referees as well as seminar audiences at the

School Fees and Vouchers when Quality of Education Matters

“…First of all, they may attribute value to the externalities of education that are present both for parents'themselves and for society at large; 14 or, they may view education as a merit good. Moreover, they can take into account the welfare of children, giving it more weight than parents do in their utility functions, as for example in Haaparanta et al (2022). Clearly, in these cases, which could be explored in further research, more weight is put on the welfare e¤ects of both school quantity and quality, thereby possibly modifying the conclusion on the impact of the reforms -plausibly in the direction of reducing the negative impact of the vouchers and the positive impact of the fee.…”