The Financing of Education

The purpose of this chapter is to analyze the different ways of financing education and its impacts on the socio-economic variables. We present all different methods of financing education regarding public and private sources and we determine the optimal level of financing. We analyze the decisions of public and private agents regarding the optimal relation of financing and educational services. We will show that there is a bidirectional relationship between economy and financing. From the one side wealthier nations collect more tax revenues and can increase the financing of education. From the other side an increase of financing could constrain the economic growth. We will present and analyze the differences between all different methods of financing and we will focus on the financing through taxing property and the use of voucher in education. This chapter: