Heterogeneous preferences, education expenditures and income distribution

This paper introduces heterogeneous preferences to a growth model which inc orporates human capital, accumulated through either public or private educa tion. The implications of heterogeneous preferences for income and its dist ribution are the focus of the paper. Public education expenditure is determ ined through a voting mechanism where the median preference rather than med ian income household is the decisive voter. The paper extends the work of G lomm and Ravikumar (1992) and shows first, that heterogeneous preferences i ncrease income inequality in the private education model and second, public education can overcome the added heterogeneity and reduce income inequalit y. The results strengthen the arguments for public education as a redistrib utive mechanism.