Education Politics, Schooling Choice and Public School Quality: The Impact of Income Polarisation

What is the role of income polarisation for explaining differentials in public funding of education? To answer this question, we provide a new theoretical modelling for the income distribution that can directly monitor income polarisation. It leads to a new income polarisation index where the middle class is represented by an interval. We implement this distribution in a political economy model with endogenous fertility and public/private educational choices. We show that when households vote on public schooling expenditures, polarisation matters for explaining disparities in public education funding across communities. Using micro-data covering two groups of school districts, we find that both income polarisation and income inequality affect public school funding with opposite signs whether there exist a Tax Limitation Expenditure (TLE) or not