Theory fails to predict clearly whether a greater public investment in the higher education system effectively decreases the inequality between the educational attainment of rich and poor students. It is assumed that a rich student enrolled at a university receives a monetary transfer from his...

It is shown that local provision of public education increases the human capital of school-age children and the value of the housing. The second effect, called capitalization, means that the higher the expenditure in local public education, the higher the value of the housings. In a...