Effect of Private School and Vouchers on the Equilibrium of a Community Model with Peer Effect

• Main Authors: Fu-Yang Chou, 周孚陽
• Other Authors: Hwang-Ruey Song
• Format: Others
• Language: en_US
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/30679680566463360613

碩士 === 國立高雄大學 === 應用經濟學系碩士班 === 98 === In this thesis we will discuss the allocation of peer effect with the existence of public school, private school, and the issuing of school vouchers. This thesis mainly follows the community model of de Bartolome (1990). However, the model assumed that family income are identical, and also assumed that there are no private school in the model. However, when looking at the problem we would like to discuss, these assumptions should be further improved. Therefore, we not only include the possibility of different income endowment, but also add private school to the model. We also discussed the distribution of school vouchers. Through the use of a numerical method, we first give a brief introduction to the model of de Bartolome (1990), discussing the conditions for the equilibrium to exist. We then discuss how different income endowment affects the conditions for equilibrium to exist. Next we discuss the conditions for private school to exist, and how the composition of students affects the educational output it creates. Finally we discuss how school vouchers affect the existence of private school and educational output. The conclusion is that for private school to exist, the following conditions have to be satisfied. The proportion of income spent on educational input for high ability students cannot be too high, marginal utility of peer effect cannot be too small, and the marginal benefit students of high-ability gain from peer effect should not be too small relative to the gain from peer effect for students of low-ability. Moreover, no matter if there is school voucher or not, the best composition for private school is to recruit students of high-ability only. Finally, it is possible for school vouchers to promote the existence of private school.