Public Finance and Public Policy by Jonathan Gruber Essay

Public Finance and Public Policy by Jonathan Gruber - Essay Example 1.Productivity If a higher level of education will make a person more productive, then the society could benefit from education in terms of higher living standards due to the increased productivity. 2.Citizenship Education makes citizens more informed as well as active voters, which in turn has positive benefits for other people through the quality improvement of the democratic process. 3.Credit Market Failures The families’ inability to borrow to finance education is another market failure that would justify the government’s intervention. 4.Failure to maximize Family Utility The government may feel that loans are not a good solution to credit market failures because it is concerned that parents would still choose appropriate levels of education for their children. 5.Redistribution In a privately funded education model, as long as education is a normal good, wealthy families will provide more education to their children than the low-income families. 11.2 How Is The Government Involved in Education? 1.Free public Education and Crowding Out 3.olving the Crowd-Out Problem: Vouchers -Consumer Sovereignty One benefit of vouchers is that they allow individual to match closely their choices to education with their tastes. -Competition Another benefit of the vouchers is that they allow the education market to take advantage of the pressures of competition that enable the private markets to operate efficiently. 4.Problems with Educational Vouchers -Vouchers Will Lead to Segregation