Endogenous Growth and the Public - Private Education Choice . ¤

An endogenous growth model of human capital accumulation with a private alternative to public education is studied. Public education is tax ...nanced and determined endogenously through a voting process. A tension between private consumers, who do not want to contribute to public education, and public consumers who want relatively large contributions is identi...ed. Public education consumers experience di¤erent growth dynamics to private education consumers, resulting in an endogenous class structure based on education. An interclass spillover is also identi...ed with public education consumers bene...ting from the growth experienced by private education consumers. The model is simulated to illustrate the endogenous income distribution, identifying an income gap between the public and private education classes. JEL Classi...cation: D31, D71, H42, I22.