Recently, attention has been given to plans for improving the public schools by allowing parents to choose where their children attend school through a school voucher system. The education voucher system exists when a government provides payment to families that allow their children to attend a private or public school of their choice. The payment is in the form of a voucher that can be given directly to the parents of the child, or indirectly to the school of choice. The purpose of the voucher systems is “to increase parental choice, promote competition and allow lower income families access to private education” (West 1997, p. 83).
The implementation of the voucher system would force poorly run schools and inadequate teachers to improve their performance. Many have speculated that the voucher system can reduce the positive externalities of education and might be inequitable. The voucher system discussed here applies to elementary and secondary education funded by tax revenues. To fully understand the school voucher system, justification of government’s role in education must first be established. Then, an examination of the effects the voucher system has in cities that have implemented this practice.
Currently, public education in the United States is universally available to Kindergarten through grade twelve. The state government sets education standards, and the locally elected school boards establish the schools policies and criteria. The public school system is funded mostly by tax dollars. In the United States the combine spending of federal, state, and local government on secondary and elementary education exceeds $471 billion (US Bureau of the Census 2006, p. 155). According to the Center on Budget and Policy Priority, almost more than half of state tax revenues fund education (2015).
The government has a clear role in subsidizing public education for secondary and elementary students. The United States government involves itself so extensively in education rather than letting the market make the necessary provisions. It is understood that “markets fail to provide an efficient good when it is a public good or when it gives rise to externalities” (Public Policy, p. 138). To understand if the government’s role in education is warranted, it is necessary to consider whether education falls into each of these categories.
A public good is a commodity or service that is provided without profit to all members of a society, either by the government, a private individual or organization that provides a benefit or increases the well being of the public. A public good must also be non-rival and non-excludable; the consumption of one does not interfere with the consumption of another and it is available to all. Education does not fit the criteria of non-rival or nonexcludable. Education can be considered a rival good because the more students that participate, the less attention each individual student will receive.
Studies have shown that class size has an effect on the quality of education for the students. In a quasi-experimental study “test scores of first-grade students in smaller classes were higher in math, reading, and language arts compared with the scores of those in selected comparison schools in the same districts with average pupil-teacher ratios of 22. 4 to 24. 5 where small classes improved student achievement by approximately 0. 2 standard deviations” (Schanzenbach 2014). The quality of education increases with fewer participants therefore education does not fit the criteria of a non-rival good.
Education also doesn’t fit the criteria for a non-excludable good because one can prevent a student from not attending class or using the services provided by the school. Education is not considered non-rival or non-excludable, and is considered a public good. Although education is a private good, there are opposing ideas on education providing benefits to society. Many believe that education reflects benefits onto society where others believe that these ‘benefits’ are not externalities and do not warrant government interference.
Hall addressed that many in favor of government involvement in education argue that ensuring every child receives the minimum amount of education is necessary to promote a stable, and democratic society (2006, p. 166). Friedman, originally in favor of this idea and later opposed, argued that a stable and democratic society is impossible without a minimum degree of literacy and knowledge on the part of most citizens (1962, p. 86). A minimum amount of education does serve a purpose in society, but it does not have an effect on democracy.
Lott showed empirical and theoretical evidence supporting the lack of effect education has on society. Lott’s proposition explained that education may provide stability, but it is not necessarily beneficial to democracy (1987, 1999). Another argument on education having beneficial externalities is the correlation between level of education and productivity of the individual and their coworkers. Hanushek explained that expanded education of an individual might indeed affect other workers in the economy and the new advancements in technology made by the educated population will lead to a spill over effect (2002, p. 065).
Although this idea may hold some truth, the effects of the spill over are not adequately reflected into the market. Hall insists that even if more educated workers creates a higher level of investment by firms leading to higher wages, the workers are still being paid for the marginal product of their labor (2006, p. 169). It is also argued that an increase in education will have a positive effect on income. One would think that people with a higher level of education would have a higher income, but this assumption is false.
Pritchett explained that within the augmented Solow odel, the estimated impact of growth for education is less than expected (rather than more) from the individual impacts, and the cross-national data suggests negative externalities and present something of a “micro-macro paradox” (2001, p. 368). Based on the evidence provided, education does not promote democracy, cause a significant spill over effect or necessarily increase the wages of educated workers. It is unanimously agreed upon that education is beneficial, but there is no strong evidence suggesting that education produces positive externalities.