Education for the masses? The interaction between wealth, educational and political inequalities

This paper presents a simple model of distribution dynamics, in which the d istributions of wealth, education and political power are circularly endoge nous. Different levels of education translate into different income and wea lth levels. Political power may (or may not) vary with wealth, and in turn affects decisions on the level of public expenditure on education. Since th e market for education credit is imperfect, some people might need to rely on public schooling, the quality of which depends on those expenditure leve ls. As a result, educational opportunities differ along the wealth distribu tion. The dynamic system displays multiple equilibria, some of which are ch aracterized by a vicious circle of interaction between educational, wealth and political inequalities. These particular equilibria, which are more une qual, are also shown to be inefficient in terms of aggregate output levels. Switching equilibria may be achieved through redistribution of political p ower.