Gradstein, Mark2014-04-172014-04-172003-11https://hdl.handle.net/10986/17900Public provision of education has often been perceived as universal and egalitarian, but in reality it is not. Political pressure typically results in incidence bias in favor of the rich. The author argues that the bias in political influence resulting from extreme income inequalities is particularly likely to generate an incidence bias, which we call social exclusion. This may then lead to a feedback mechanism whereby inequality in the incidence of public spending on education breeds higher income inequality, thus generating multiple equilibria: with social exclusion and high inequality; and with social inclusion and relatively low inequality. The author also shows that the latter equilibrium leads to higher long-run growth than the former. An extension of the basic model reveals that spillover effects among members of social groups differentiated by race or ethnicity may reinforce the support for social exclusion.en-USCC BY 3.0 IGOEDUCATIONAL FINANCEPUBLIC EXPENDITURES FOR EDUCATIONINCOME INEQUALITIESSOCIAL ISOLATIONSPILLOVER EFFECTSRACIAL GROUPSETHNIC GROUPS AGRICULTUREASSET INEQUALITYAVAILABLE DATAAVERAGE INCOMEAVERAGE INCOME GROWTHAVERAGE INCOME GROWTH RATEAVERAGE INCOME LEVELCAPITAL INVESTMENTCONSIDERABLE DIFFERENCESDATA SETDEMOCRACYDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT REPORTDISPOSABLE INCOMEDISTRIBUTIONAL EFFECTSDISTRIBUTIONAL IMPLICATIONSDURABLE GOODSDYNAMIC ANALYSISECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC REVIEWECONOMIC REVIEW PAPERSECONOMIC SURVEYSECONOMICS OF EDUCATIONEDUCATIONAL RESOURCESEMPIRICAL ANALYSISEMPIRICAL EVIDENCEENDOGENOUS GROWTHEQUAL ACCESSEQUILIBRIUM ANALYSISEXPECTED UTILITYGINI COEFFICIENTGROWTH EFFECTGROWTH RATEGROWTH RATESGROWTH THEORIESHIGH INEQUALITYHOUSEHOLD CONSUMPTIONHOUSEHOLD INCOMEHUMAN CAPITALINCOMEINCOME DISTRIBUTIONINCOME DISTRIBUTIONSINCOME INEQUALITYINCOME INEQUALITY DATAINCOMESINEQUALITYINHERITANCEINTERGENERATIONAL MOBILITYLIFE EXPECTANCYLONG RUNLONG-RUN GROWTHLOW INEQUALITYMACROECONOMIC IMPLICATIONSMARGINAL EFFECTMEDIAN INCOMEMERITOCRACYMIDDLE CLASSMULTIPLE EQUILIBRIANEGATIVE EFFECTOLD ISSUESPOLICY RESEARCHPOLITICAL ECONOMYPOLITICAL EQUILIBRIUMPOLITICAL FORCESPOLITICAL INFLUENCEPOLITICAL SUPPORTPOLITICAL SYSTEMPOOR COUNTRIESPOOR HOUSEHOLDSPOOR PEOPLEPOPULATION GROUPSPOVERTY REDUCTIONPRIMARY EDUCATIONPRODUCTION FUNCTIONPRODUCTION INPUTSPUBLIC EDUCATIONPUBLIC EXPENDITUREPUBLIC FUNDSPUBLIC GOODPUBLIC GOODSPUBLIC INSTITUTIONSPUBLIC INTERVENTIONPUBLIC PROVISIONPUBLIC SERVICESPUBLIC SPENDINGRELATIVE IMPORTANCERENT SEEKINGRESOURCE ALLOCATIONRURAL AREASSIGNIFICANT EFFECTSIGNIFICANT FACTORSOCIAL EXCLUSIONSOCIAL GROUPSOCIAL GROUPSSOCIAL INCLUSIONSOCIAL SERVICESSTANDARD DEVIATIONTERTIARY EDUCATIONUNEQUAL SOCIETIESURBAN POPULATIONUTILITY FUNCTIONVOTERSWAGESWEALTH10.1596/1813-9450-3162