Nber Working Paper Series Income Inequality, the Median Voter, and the Support for Public Education

Using a panel of U.S. school districts spanning 1970 – 2000, we examine the relationship between income inequality and fiscal support for public education. In contrast with recent theoretical and empirical work suggesting a negative relationship between inequality and public spending, we find results consistent with a median voter model, in which inequality that reduces the median voter’s tax share induces higher local spending on public education. We estimate that 12 to 22 percent of the increase in local school spending over this period is attributable to rising inequality. Sean Corcoran New York University Institute for Education and Social Policy, Suite 805 665 Broadway New York, NY 10012 [email protected] William N. Evans Keough-Hesburgh Professor of Economics Department of Economics and Econometrics 447 Flanner Hall University of Notre Dame Notre Dame, IN 46556 and NBER [email protected]