When being out of school can be bad for the school: a case for conditional cash transfers

We develop a theoretical model to analyze how the lack of full enrollment affects the quality of public education chosen by majority voting. In our model, the households choose whether to enrol their child at school or not. Poor households do not send their children to school because there is an opportunity cost related to education. We show that if preferences for public education quality are decreasing in income, an ends against the middle equilibrium may arise with low levels of expenditures. In this setting, the introduction of a conditional cash transfer program may increase the educational budget chosen by majority voting. Indeed, by raising school enrollment, it increases the political support for educational expenditures.