We use computational experiments to study the impact of means-tested educat
ion vouchers on the level and distribution of educational expenditures. Our
benchmark is a regime where public and private schools coexist. Our means-
tested voucher regime is one where households with lower incomes receive a
larger voucher. Both the level of funding and the allocation of vouchers by
income are endogenously determined by sequential majority voting. We exami
ne the effect on educational expenditures of switching from a mixed public/
private education regime to a means-tested voucher regime or to a uniform v
oucher regime where all households receive the same voucher. We find that:
(i) Under means-tested vouchers, public funding for education is the smalle
st but average educational expenditure is the largest; (ii) inequality of e
ducational resources is smaller under means-tested than that under uniform
vouchers or the mixed regime; (iii) the 'poor' and the 'rich' households pr
efer means testing to either the mixed or uniform regime. (C) 2000 Elsevier
Science B.V. All rights reserved. JEL classification: I22, I28; D72.