Public versus private education when differential fertility matters

We assess the merits of different education systems in a framework that accounts for the joint decision problem of parents regarding fertility and education. Specifically, we compare the implications of a public and a private schooling regime for economic growth and inequality. We find that private schooling leads to higher growth when there is little inequality in human capital endowments across families. In contrast, when inequality is high, public education yields higher growth by reducing fertility differentials. Our analysis highlights the importance of accounting for endogenous fertility differentials when analyzing educational policies. (C) 2003 Elsevier B.V. All rights reserved