Department of Economics2024-11-0920030304-393210.1016/j.jmoneco.2003.01.0042-s2.0-0345446605http://dx.doi.org/10.1016/j.jmoneco.2003.01.004https://hdl.handle.net/20.500.14288/10435Educational subsidies are frequently justified as a method of altering the income distribution. It is thus natural to compare education to other tax-transfer schemes designed to achieve distributional objectives. While equity-efficiency trade-offs are frequently discussed, they are rarely explicitly treated. This paper creates a general equilibrium model of school attendance, labor supply, wage determination, and aggregate production, which is used to compare alternative redistribution devices in terms of both deadweight loss and distributional outcomes. A wage subsidy generally dominates tuition subsidies across a wide range of fundamental parameters for the economy. Both are generally superior to a negative income tax. With externalities in production, however, there is an unambiguous role for governmental subsidy of education, because it both raises GDP and creates a more equal income distribution.Business enterprisesFinanceEconomicsJournal Article187348900005Q19668