Majority choice of an income-targeted educational voucher

Abstract

A model of majority choice of voucher characteristics with quantitative counterpart explains observed income eligibility requirements for educational vouchers. Households differ by income and preference for religious schooling. They elect a policy maker who chooses public school expenditure, a voucher, a maximum income for voucher eligibility, and a tax to finance public expenditure. Equilibrium has a voucher below per student public expenditure, an eligibility threshold near 300 percent of the poverty level, and a majority in public school though with substantial voucher usage, all properties typical of US voucher programs. Disallowing a voucher leads to higher per student public expenditure.