Hidalgo-Hidalgo, M., and I. Iturbe-Ormaetxe
Journal of Economics – 105.1 (2012): 1-27.
Abstract: We analyze public intervention in two educational levels: basic education and college education. The government decides per capita expenditure at each level and the subsidy for college education. We explore the effect of transferring money from one level to the other on equity and efficiency. We prove the existence of an Equity-Efficiency Frontier (EEF), and analyze which policy reforms are optimal when the society is not at the EEF. For developed countries, this policy consists of transferring resources from college education to basic education.