Assume now that education is provided by public schools fixing the level of education for all agents at eit = epub = const.. Assume further that agents are not able to provide additional education privately, i.e. they treat the level of education as given. Public schooling is financed by a proportional tax, 0 << 1 on labour incomes such that the budget constraint of a household i reads as (1-v) whub (1 — 2n-pub) = c.pub (5) a. Derive the desired number of children under the assumption that education is provided by public schooling. Explain very briefly the difference of your result as compared to 1). b. The government has to observe a balanced budget, i.e. expenditures for public schooling equal tax revenues (whub (1-znb) Nt), where N₁ represents the number of parental households in the economy. Derive the level of public edu- cation epub for a given tax and explain this result. c. Given your observations in 1)c., consider an economy that converges towards 2. When and why would you recommend (if at all) that education should be provided by public schools?
Assume now that education is provided by public schools fixing the level of education for all agents at eit = epub = const.. Assume further that agents are not able to provide additional education privately, i.e. they treat the level of education as given. Public schooling is financed by a proportional tax, 0 << 1 on labour incomes such that the budget constraint of a household i reads as (1-v) whub (1 — 2n-pub) = c.pub (5) a. Derive the desired number of children under the assumption that education is provided by public schooling. Explain very briefly the difference of your result as compared to 1). b. The government has to observe a balanced budget, i.e. expenditures for public schooling equal tax revenues (whub (1-znb) Nt), where N₁ represents the number of parental households in the economy. Derive the level of public edu- cation epub for a given tax and explain this result. c. Given your observations in 1)c., consider an economy that converges towards 2. When and why would you recommend (if at all) that education should be provided by public schools?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer the attached question. It is also relating to the first question as seen on this page. I would like to compare it with my answers.
Transcribed Image Text:2) Assume now that education is provided by public schools fixing the level of education
for all agents at ei,t = epub = const.. Assume further that agents are not able to
provide additional education privately, i.e. they treat the level of education as given.
Public schooling is financed by a proportional tax, 0 < < 1 on labour incomes such
that the budget constraint of a household i reads as
(1 − ս) աub (1 − zn-pub) = c.pub
(5)
a. Derive the desired number of children under the assumption that education is
provided by public schooling. Explain very briefly the difference of your result
as compared to 1).
b. The government has to observe a balanced budget, i.e. expenditures for public
schooling equal tax revenues (v whub (1-znub) Nt), where N represents the
number of parental households in the economy. Derive the level of public edu-
cation epub for a given tax and explain this result.
c. Given your observations in 1)c., consider an economy that converges towards
. When and why would you recommend (if at all) that education should be
provided by public schools?
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