Education and selective vouchers

A widely accepted result in the literature is that the majority of voters are against the introduction of universal vouchers. Chen and West (2000) predict that voters’ attitudes towards selective vouchers (SV) may be different. They claim that voters are indifferent between the no-voucher and SV regimes, unless competition leads to a reduction in the education price. I show that, when public schools are congested, the majority of voters are in favour of SV. Furthermore, SV induces a Pareto improvement. In equilibrium, the introduction of SV induces a reduction in income stratification at school, with some relatively poor students attending private schools.