This document analyzes which families benefit from public education provision in Italy. It focuses on a mechanism where the quality of public education induces different sorting of families into private schooling. The paper interprets free public education as in-kind transfers received by families who do not choose private school. It aims to examine how the quality of education system and differences in household earning capacity affect the type of school chosen. The value of educational transfers is measured as the cost the government saves by providing the service for free.

1. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Who bene

2. ts from Public Education Provision?
Evidence from Italy.
Francesco Andreoli|; Giorgia Casalone} Daniela Sonedda}
|CEPS/INSTEAD
University of Verona
}University of Eastern Piedmont
Torino, July 17th 2014
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

3. ts from Public Education Provision? TORINO 1 / 61

4. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
The Republic guarantees the freedom of the arts and sciences, which may be freely
taught.
The Republic lays down general rules for education and establishes state schools for all
branches and grades. Entities and private persons have the right to establish schools and
institutions of education, at no cost to the State.
The law, when setting out the rights and obligations for the non-state schools which
request parity, shall ensure that these schools enjoy full liberty and oer their pupils an
education and quali

5. cations of the same standards as those aorded to pupils in state
schools.
State examinations are prescribed for admission to and graduation from the various
branches and grades of schools and for quali

6. cation to exercise a profession.
Institutions of higher learning, universities and academies, have the right to establish
their own regulations within the limits laid down by the laws of the State.
Constitution of the Italian Republic, Art. 33.
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8. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

9. ts from Public Education Provision? TORINO 3 / 61

10. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Objectives of this paper:
I This paper will not assess the degree of redistribution achieved through
public education provision.
I This paper aims at analyzing the mechanisms behind the
redistributiveness of public education provision using Italian data.
We interpret almost free public educational services as transfers in-kind received
by families who do not choose private education.
The monetary equivalent value of the transfers in-kind is measured by the
expected cost supported by the government to provide the service for free,
re
ecting the quality of the service provided.
kcgre = !g acre
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

11. ts from Public Education Provision? TORINO 4 / 61

12. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Objectives of this paper:
I This paper will not assess the degree of redistribution achieved through
public education provision.
I This paper aims at analyzing the mechanisms behind the
redistributiveness of public education provision using Italian data.
We interpret almost free public educational services as transfers in-kind received
by families who do not choose private education.
The monetary equivalent value of the transfers in-kind is measured by the
expected cost supported by the government to provide the service for free,
re
ecting the quality of the service provided.
kcgre = !g acre
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

13. ts from Public Education Provision? TORINO 4 / 61

14. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Objectives of this paper:
I This paper will not assess the degree of redistribution achieved through
public education provision.
I This paper aims at analyzing the mechanisms behind the
redistributiveness of public education provision using Italian data.
We interpret almost free public educational services as transfers in-kind received
by families who do not choose private education.
The monetary equivalent value of the transfers in-kind is measured by the
expected cost supported by the government to provide the service for free,
re
ecting the quality of the service provided.
kcgre = !g acre
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

15. ts from Public Education Provision? TORINO 4 / 61

16. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Objectives of this paper:
I This paper will not assess the degree of redistribution achieved through
public education provision.
I This paper aims at analyzing the mechanisms behind the
redistributiveness of public education provision using Italian data.
We interpret almost free public educational services as transfers in-kind received
by families who do not choose private education.
The monetary equivalent value of the transfers in-kind is measured by the
expected cost supported by the government to provide the service for free,
re
ecting the quality of the service provided.
kcgre = !g acre
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

17. ts from Public Education Provision? TORINO 4 / 61

18. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Objectives of this paper:
I This paper will not assess the degree of redistribution achieved through
public education provision.
I This paper aims at analyzing the mechanisms behind the
redistributiveness of public education provision using Italian data.
We interpret almost free public educational services as transfers in-kind received
by families who do not choose private education.
The monetary equivalent value of the transfers in-kind is measured by the
expected cost supported by the government to provide the service for free,
re
ecting the quality of the service provided.
kcgre = !g acre
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

19. ts from Public Education Provision? TORINO 4 / 61

20. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

21. ts from Public Education Provision? TORINO 5 / 61

22. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

23. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

24. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

25. ts from Public Education Provision? TORINO 6 / 61

26. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

27. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

28. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

29. ts from Public Education Provision? TORINO 6 / 61

30. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

31. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

32. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

33. ts from Public Education Provision? TORINO 6 / 61

34. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

35. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

36. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

37. ts from Public Education Provision? TORINO 6 / 61

38. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

39. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

40. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

41. ts from Public Education Provision? TORINO 6 / 61

42. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

43. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

44. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

45. ts from Public Education Provision? TORINO 6 / 61

46. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

47. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

48. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

49. ts from Public Education Provision? TORINO 6 / 61

50. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Whatever the reason is, as long as:
I Rich households choose private education.
I Poor families consume the publicly provided education good

51. nanced
by general taxation.
I Public education provision is redistributive.
This paper focuses on:
I A speci

52. c mechanism operating through the quality of the education
system.
I Dierent sorting of the families into private schooling.
I Motivate a government that aims at redistributing resources from the
rich to the poor.
I To use public education provision as transfers in-kind.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

53. ts from Public Education Provision? TORINO 6 / 61

54. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Educational transfers in-kind: opportunity costs to choose private education.
It is the monetary value that an household give up if enroll her kids at costly
private schools.
kh =
XCh
c=1
kcgre
where Ch is the number of children with a positive expected value of the
educational transfers in-kind.
I The extensive margin: the bene

55. ciaries.
I The intensive margin: proxy for an objective measure of the quality
level, the expected cost supported by the the government to provide
the service for free.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

56. ts from Public Education Provision? TORINO 7 / 61

57. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Educational transfers in-kind: opportunity costs to choose private education.
It is the monetary value that an household give up if enroll her kids at costly
private schools.
kh =
XCh
c=1
kcgre
where Ch is the number of children with a positive expected value of the
educational transfers in-kind.
I The extensive margin: the bene

58. ciaries.
I The intensive margin: proxy for an objective measure of the quality
level, the expected cost supported by the the government to provide
the service for free.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

59. ts from Public Education Provision? TORINO 7 / 61

60. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Educational transfers in-kind: opportunity costs to choose private education.
It is the monetary value that an household give up if enroll her kids at costly
private schools.
kh =
XCh
c=1
kcgre
where Ch is the number of children with a positive expected value of the
educational transfers in-kind.
I The extensive margin: the bene

61. ciaries.
I The intensive margin: proxy for an objective measure of the quality
level, the expected cost supported by the the government to provide
the service for free.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

62. ts from Public Education Provision? TORINO 7 / 61

63. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Besley and Coate 1991 model: families sort themselves into private education
Self-targeting mechanims achieved by imposing the cost on the recipients
Restrictions on the quality of the public educational service.
Two dierent distributional dimensions may help at explaining which families
bene

64. t from public education provision and why.
I For a given quality level, household's earning capacity can be one of
the main determinant of the access into private education.
I For a given household's earning capacity, the quality perceived by the
families may explain the type of school chosen.
The two distributional dimensions pave the way to use a structural quantile
treatment eect method.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

65. ts from Public Education Provision? TORINO 8 / 61

66. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Besley and Coate 1991 model: families sort themselves into private education
Self-targeting mechanims achieved by imposing the cost on the recipients
Restrictions on the quality of the public educational service.
Two dierent distributional dimensions may help at explaining which families
bene

67. t from public education provision and why.
I For a given quality level, household's earning capacity can be one of
the main determinant of the access into private education.
I For a given household's earning capacity, the quality perceived by the
families may explain the type of school chosen.
The two distributional dimensions pave the way to use a structural quantile
treatment eect method.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

68. ts from Public Education Provision? TORINO 8 / 61

69. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Besley and Coate 1991 model: families sort themselves into private education
Self-targeting mechanims achieved by imposing the cost on the recipients
Restrictions on the quality of the public educational service.
Two dierent distributional dimensions may help at explaining which families
bene

70. t from public education provision and why.
I For a given quality level, household's earning capacity can be one of
the main determinant of the access into private education.
I For a given household's earning capacity, the quality perceived by the
families may explain the type of school chosen.
The two distributional dimensions pave the way to use a structural quantile
treatment eect method.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

71. ts from Public Education Provision? TORINO 8 / 61

72. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Besley and Coate 1991 model: families sort themselves into private education
Self-targeting mechanims achieved by imposing the cost on the recipients
Restrictions on the quality of the public educational service.
Two dierent distributional dimensions may help at explaining which families
bene

73. t from public education provision and why.
I For a given quality level, household's earning capacity can be one of
the main determinant of the access into private education.
I For a given household's earning capacity, the quality perceived by the
families may explain the type of school chosen.
The two distributional dimensions pave the way to use a structural quantile
treatment eect method.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

74. ts from Public Education Provision? TORINO 8 / 61

75. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Besley and Coate 1991 model: families sort themselves into private education
Self-targeting mechanims achieved by imposing the cost on the recipients
Restrictions on the quality of the public educational service.
Two dierent distributional dimensions may help at explaining which families
bene

76. t from public education provision and why.
I For a given quality level, household's earning capacity can be one of
the main determinant of the access into private education.
I For a given household's earning capacity, the quality perceived by the
families may explain the type of school chosen.
The two distributional dimensions pave the way to use a structural quantile
treatment eect method.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

77. ts from Public Education Provision? TORINO 8 / 61

78. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
Figure: Tax Deductions Heterogeneity for Household's Income and Educational
Transfers In-Kind.
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80. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Motivation
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82. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

83. ts from Public Education Provision? TORINO 11 / 61

84. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

85. ts from Public Education Provision? TORINO 11 / 61

86. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

87. ts from Public Education Provision? TORINO 11 / 61

88. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

89. ts from Public Education Provision? TORINO 11 / 61

90. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

91. ts from Public Education Provision? TORINO 11 / 61

92. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

93. ts from Public Education Provision? TORINO 11 / 61

94. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Outline of the Talk
Besley and Coate 1991 model.
Imputation rules for Educational Transfers In-Kind.
Data and Sample Selection.
Our instrument: Expected Maximum Tax Deductions.
Empirical Strategy.
Results and Discussion.
Conclusions.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

95. ts from Public Education Provision? TORINO 11 / 61

96. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Besley and Coate 1991 model: kmax k
Figure: The Economy's Pareto Frontier (AC) and Utility Feasibility Frontier (DEF)
with Public Education Provision.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

97. ts from Public Education Provision? TORINO 12 / 61

98. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Besley and Coate 1991 model: kmax k
Figure: The Economy's Pareto Frontier (AC) and Utility Feasibility Frontier (DEF)
with Public Education Provision.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

99. ts from Public Education Provision? TORINO 12 / 61

100. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Besley and Coate 1991 model: kmax k
Figure: The Economy's Pareto Frontier (AC) and Utility Feasibility Frontier (DEF)
with Public Education Provision.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

101. ts from Public Education Provision? TORINO 12 / 61

102. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Sorting of the Families into Private-Public Education
The government redistributes resources if sets a quality level of the publicly
provided education good:
1 low enough that rich households reveal their earning capacities buying
the educational services in the private market.
2 not so low that the poor households consume it without revealing their
true earning capacities that remain unobserved.
Drawbacks:
I The incentive compatibility constraint of the rich sets the limit on the
redistributiveness of the program.
I Deadweight loss inherent in an inecient (to the poor households)
quality of the public provision of education.
It is precisely the ability of educational transfers in-kind to aect the households'
consumption decisions on the education good that motivates public education
provision as a redistributive transfer in-kind program.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

103. ts from Public Education Provision? TORINO 13 / 61

104. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Sorting of the Families into Private-Public Education
The government redistributes resources if sets a quality level of the publicly
provided education good:
1 low enough that rich households reveal their earning capacities buying
the educational services in the private market.
2 not so low that the poor households consume it without revealing their
true earning capacities that remain unobserved.
Drawbacks:
I The incentive compatibility constraint of the rich sets the limit on the
redistributiveness of the program.
I Deadweight loss inherent in an inecient (to the poor households)
quality of the public provision of education.
It is precisely the ability of educational transfers in-kind to aect the households'
consumption decisions on the education good that motivates public education
provision as a redistributive transfer in-kind program.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

105. ts from Public Education Provision? TORINO 13 / 61

106. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Sorting of the Families into Private-Public Education
The government redistributes resources if sets a quality level of the publicly
provided education good:
1 low enough that rich households reveal their earning capacities buying
the educational services in the private market.
2 not so low that the poor households consume it without revealing their
true earning capacities that remain unobserved.
Drawbacks:
I The incentive compatibility constraint of the rich sets the limit on the
redistributiveness of the program.
I Deadweight loss inherent in an inecient (to the poor households)
quality of the public provision of education.
It is precisely the ability of educational transfers in-kind to aect the households'
consumption decisions on the education good that motivates public education
provision as a redistributive transfer in-kind program.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

107. ts from Public Education Provision? TORINO 13 / 61

108. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Sorting of the Families into Private-Public Education
The government redistributes resources if sets a quality level of the publicly
provided education good:
1 low enough that rich households reveal their earning capacities buying
the educational services in the private market.
2 not so low that the poor households consume it without revealing their
true earning capacities that remain unobserved.
Drawbacks:
I The incentive compatibility constraint of the rich sets the limit on the
redistributiveness of the program.
I Deadweight loss inherent in an inecient (to the poor households)
quality of the public provision of education.
It is precisely the ability of educational transfers in-kind to aect the households'
consumption decisions on the education good that motivates public education
provision as a redistributive transfer in-kind program.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

109. ts from Public Education Provision? TORINO 13 / 61

110. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Sorting of the Families into Private-Public Education
The government redistributes resources if sets a quality level of the publicly
provided education good:
1 low enough that rich households reveal their earning capacities buying
the educational services in the private market.
2 not so low that the poor households consume it without revealing their
true earning capacities that remain unobserved.
Drawbacks:
I The incentive compatibility constraint of the rich sets the limit on the
redistributiveness of the program.
I Deadweight loss inherent in an inecient (to the poor households)
quality of the public provision of education.
It is precisely the ability of educational transfers in-kind to aect the households'
consumption decisions on the education good that motivates public education
provision as a redistributive transfer in-kind program.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

111. ts from Public Education Provision? TORINO 13 / 61

112. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Sorting of the Families into Private-Public Education
The government redistributes resources if sets a quality level of the publicly
provided education good:
1 low enough that rich households reveal their earning capacities buying
the educational services in the private market.
2 not so low that the poor households consume it without revealing their
true earning capacities that remain unobserved.
Drawbacks:
I The incentive compatibility constraint of the rich sets the limit on the
redistributiveness of the program.
I Deadweight loss inherent in an inecient (to the poor households)
quality of the public provision of education.
It is precisely the ability of educational transfers in-kind to aect the households'
consumption decisions on the education good that motivates public education
provision as a redistributive transfer in-kind program.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

113. ts from Public Education Provision? TORINO 13 / 61

114. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

115. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
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117. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

118. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
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120. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

121. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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123. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

124. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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126. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

127. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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129. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

130. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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132. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

133. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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135. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Data and Sample Selection
Data Sources:
I y: (Net of Taxes) Income: Microsimulated by C. Fiorio.
I k: Educational Transfers In-Kind: MIPA-INVALSI.
I x: Other Covariates: SHIW, 2004, a nationally representative
household survey conducted every two years by Bank of Italy.
Two Main Data Cuts:
1 Families that are potentially entitled to bene

136. t from public spending on
education: at least one child aged from 3 to 23 years old (children
born between 1981 and 2001).
2 Families whose head aged from 33 to 60 years old at the time of the
survey (individuals born between 1944 and 1971).
We end up with 2030 observations.
Descriptive Statistics
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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138. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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140. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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142. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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144. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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146. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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148. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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150. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
Value of the educational transfer in-kind received by each student:
I acre : average costs of producing it.
I r : regions.
I e: educational level.
Recipients: all individuals aged between 3 and 5 years and those aged from 6 to 23
years that classify themselves as student.
kcgre = !g acre (1)
!g : probability to attend public schools.
g: reference group.
kcgre : expected value of the educational transfers in-kind.
Regional Variability
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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152. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
The probability to attend public schools is calculated using ISTAT, Multiscopo
Survey, 2005.
Reference Group:
I macroarea.
I age classes.
I level of education of the parents.
I occupational conditions of the father.
Expected value of the educational transfers in-kind accruing to the family:
kh =
XCh
c=1
kcgre (2)
Ch: number of children with a positive expected value of the educational transfers
in-kind.
If relevant characteristics are taken into account: good approximation of the
distributional pro

153. les of these public educational services.
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155. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
The probability to attend public schools is calculated using ISTAT, Multiscopo
Survey, 2005.
Reference Group:
I macroarea.
I age classes.
I level of education of the parents.
I occupational conditions of the father.
Expected value of the educational transfers in-kind accruing to the family:
kh =
XCh
c=1
kcgre (2)
Ch: number of children with a positive expected value of the educational transfers
in-kind.
If relevant characteristics are taken into account: good approximation of the
distributional pro

156. les of these public educational services.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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158. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
The probability to attend public schools is calculated using ISTAT, Multiscopo
Survey, 2005.
Reference Group:
I macroarea.
I age classes.
I level of education of the parents.
I occupational conditions of the father.
Expected value of the educational transfers in-kind accruing to the family:
kh =
XCh
c=1
kcgre (2)
Ch: number of children with a positive expected value of the educational transfers
in-kind.
If relevant characteristics are taken into account: good approximation of the
distributional pro

159. les of these public educational services.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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161. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
The probability to attend public schools is calculated using ISTAT, Multiscopo
Survey, 2005.
Reference Group:
I macroarea.
I age classes.
I level of education of the parents.
I occupational conditions of the father.
Expected value of the educational transfers in-kind accruing to the family:
kh =
XCh
c=1
kcgre (2)
Ch: number of children with a positive expected value of the educational transfers
in-kind.
If relevant characteristics are taken into account: good approximation of the
distributional pro

162. les of these public educational services.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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164. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
The probability to attend public schools is calculated using ISTAT, Multiscopo
Survey, 2005.
Reference Group:
I macroarea.
I age classes.
I level of education of the parents.
I occupational conditions of the father.
Expected value of the educational transfers in-kind accruing to the family:
kh =
XCh
c=1
kcgre (2)
Ch: number of children with a positive expected value of the educational transfers
in-kind.
If relevant characteristics are taken into account: good approximation of the
distributional pro

165. les of these public educational services.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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167. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Educational Transfers In-kind: Imputation Rules
The probability to attend public schools is calculated using ISTAT, Multiscopo
Survey, 2005.
Reference Group:
I macroarea.
I age classes.
I level of education of the parents.
I occupational conditions of the father.
Expected value of the educational transfers in-kind accruing to the family:
kh =
XCh
c=1
kcgre (2)
Ch: number of children with a positive expected value of the educational transfers
in-kind.
If relevant characteristics are taken into account: good approximation of the
distributional pro

168. les of these public educational services.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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170. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

171. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
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173. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

174. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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176. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

177. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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179. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

180. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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182. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

183. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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185. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

186. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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188. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Equivalence Scales
1 Educational transfers in-kind: Simpli

189. ed Needs Adjusted, Aaberge, Langorgen
and Lindgren, 2013.
I 0:5: household's components other than kids.
I 0:3: kids aged from 3 to 5 years old.
I 0:66: kids aged from 6 to 13 years old.
I 0:93: kids aged from 14 to 23 years old.
2 Income: EU Scale.
I 1: household's head.
I 0:3: kids aged from 3 to 13 years old.
I 0:5: spouse, kids older than 13 years old, other household's
components.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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191. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

192. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

193. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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195. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

196. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

197. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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199. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

200. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

201. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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203. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

204. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

205. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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207. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

208. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

209. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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211. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

212. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

213. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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215. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Four dierent values for maximum tax deductions

216. xed by the law.
For each household member, we calculate the expected value of the maximum tax
deductions as a weighted average of the four maximum tax deductions

217. xed by the
law.
zm =
X4
is=1
a;
dis
We employ as weights the individual probability to claim these deductions (Istat).
I age classes.
I gender.
The household expected tax deductions:
zh =
P
zm
hs
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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219. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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221. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Expected Maximum Tax Deductions
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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223. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

224. 0 + Xh

225. 1 + Xhh

226. 2 + Xr

227. 3+FB1

228. 4+FB2

229. 5 + Z

230. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

231. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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233. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

234. 0 + Xh

235. 1 + Xhh

236. 2 + Xr

237. 3+FB1

238. 4+FB2

239. 5 + Z

240. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

241. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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243. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

244. 0 + Xh

245. 1 + Xhh

246. 2 + Xr

247. 3+FB1

248. 4+FB2

249. 5 + Z

250. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

251. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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253. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

254. 0 + Xh

255. 1 + Xhh

256. 2 + Xr

257. 3+FB1

258. 4+FB2

259. 5 + Z

260. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

261. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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263. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

264. 0 + Xh

265. 1 + Xhh

266. 2 + Xr

267. 3+FB1

268. 4+FB2

269. 5 + Z

270. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

271. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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273. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

274. 0 + Xh

275. 1 + Xhh

276. 2 + Xr

277. 3+FB1

278. 4+FB2

279. 5 + Z

280. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

281. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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283. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

284. 0 + Xh

285. 1 + Xhh

286. 2 + Xr

287. 3+FB1

288. 4+FB2

289. 5 + Z

290. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

291. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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293. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

294. 0 + Xh

295. 1 + Xhh

296. 2 + Xr

297. 3+FB1

298. 4+FB2

299. 5 + Z

300. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

301. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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303. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

304. 0 + Xh

305. 1 + Xhh

306. 2 + Xr

307. 3+FB1

308. 4+FB2

309. 5 + Z

310. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

311. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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313. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Parametric estimation based on a linear structural model for conditional quantiles of
the form:
Y =

314. 0 + Xh

315. 1 + Xhh

316. 2 + Xr

317. 3+FB1

318. 4+FB2

319. 5 + Z

320. 6 + U
K = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y 6 + u
Y : Household Income Distribution.
K: Educational Transfers In-kind Distribution.
FB1: Unobserved Characteristics: Grandparental Occupational Conditions.
FB2: Unobserved Characteristics: Level of Education.
Z: Expected Maximum Tax Deductions.
Xh: Household characteristics: number of earnings recipients, dummies for the
area of residence, polynomial of degree one in the cohort of birth of the

321. rst child.
Xhh: Head of the family characteristics: gender (i.e. if female), age, age squared,
years of schooling.
Xr : Local market conditions: regional GDP per capita and unemployment rate.
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323. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Structural Quantile Treatment Eect Method
Two dierent distributional dimensions (consider only location shift eect):
1 Fix a quantile of the household earning capacity, i.e. 20th:
K20 = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y6 + U^207 + u20
K80 = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y6 + U^207 + u80
2 Fix a quantile of the educational transfers in-kind distribution, i.e. 20th:
K20 = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y6 + U^207 + u20
K20 = 0 + Xh1 + Xhh2 + Xr3+FB14+FB25 + Y6 + U^807 + u20
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325. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Benchmark: Main Sample
Table: OLS, Control Function and Quantile Regression Estimates
OLS CF Quantiles Educational Transfers In-kind
20% 30% 50% 70% 80%
(1) (2) (3) (4) (5) (6) (7)
Income -0.02*** -0.73*** -0.00 -0.01 -0.03*** -0.02* -0.02***
(0.00) (0.03) (0.01) (0.01) (0.01) (0.01) (0.01)
FB1 0.04** 0.58*** 0.01 0.03 0.07** 0.08* 0.07
(0.02) (0.03) (0.03) (0.03) (0.03) (0.05) (0.06)
FB2 -0.02 0.31*** 0.00 -0.01 -0.05* -0.05 -0.03
(0.02) (0.02) (0.03) (0.03) (0.03) (0.05) (0.06)
Intercept shift 0.73***
(0.03)
Slope shift -0.00
(0.00)
Note: Robust standard errors are reported in parentheses.
Comp. Post Comp. Family Back. ATE ATEC ATED
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327. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Results
Table: Structural Quantile Treatment Eect Estimation: First Stage
Quantile of Income
20% 30% 50% 70% 80%
(1) (2) (3) (4) (5)
Main Sample
Exp. Tax Deductions 0.907*** 1.156** 1.045*** 1.348*** 1.665***
(0.17) (0.56) (0.18) (0.21) (0.38)
Comp. Education
Exp. Tax Deductions 1.069*** 1.109*** 6.853*** 1.879*** 2.166***
(0.28) (0.28) (0.37) (0.48) (0.50)
Post Comp. Education
Exp. Tax Deductions 0.996*** 1.298*** 1.468*** 1.963*** 1.952***
(0.33) (0.21) (0.32) (0.43) (0.74)
Note: Expected Maximum Tax Deductions of the Household used as instrument.
Bootstrapped standard errors are reported in parentheses.
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329. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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330. ts from Public Education Provision? TORINO 25 / 61

331. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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332. ts from Public Education Provision? TORINO 25 / 61

333. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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334. ts from Public Education Provision? TORINO 25 / 61

335. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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336. ts from Public Education Provision? TORINO 25 / 61

337. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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338. ts from Public Education Provision? TORINO 25 / 61

339. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

340. ts from Public Education Provision? TORINO 25 / 61

341. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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342. ts from Public Education Provision? TORINO 25 / 61

343. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
First Stage: Interpretation
The overall eect of a change of (expected) tax deductions on (net of taxes) income:
@yN
@d
= t0 +
@yG
@d
(1 t0)
yN: Net of Taxes Income, yN= yG -T.
yG : Gross Income.
T: Income Tax Liability, T = at(yG d).
at: Average Personal Income Tax Rate.
d: Tax Deductions.
t0: Marginal Personal Income Tax Rate.
The variation of (net of taxes) income due to a one euro increase of (expected) tax
deductions is the sum
Tax cut equal to the marginal tax rate: direct eect.
Variation of the gross income net of the marginal tax rate: indirect eect through
the labour supply.
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345. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Marginal Quantile Treatment Eects of Income
Main Sample 2030 obs.
Household Size Family Background Variables Household Unobserved Characteristics
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347. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Homogeneity Tests: Main Sample
20th and 80th quantiles of K, given Y
Y : 20% Y : 30% Y : 50% Y : 70% Y : 80%
MQTEY 0.184* 0.149** 0.166 0.133** 0.108*
(0.11) (0.07) (0.16) (0.06) (0.06)
20th and 80th quantiles of Y, given K
K : 20% K : 30% K : 50% K : 70% K : 80%
MQTEY -0.570*** -0.613*** -0.604*** -0.624*** -0.647***
(0.12) (0.08) (0.06) (0.07) (0.05)
Robustness: Using Family Background Variables
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349. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Marginal Quantile Treatment Eects of Income
Compulsory Education: 888 obs.
Homogeneity tests: Compulsory Robustness: Using Family Background Variables
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351. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Marginal Quantile Treatment Eects of Income
Post Compulsory Education: 959 obs.
Homogeneity tests: Post Compulsory Family Background Unobserved Heterogeneity
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

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353. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
An increase in income reduces the amount of educational transfers in-kind.
I more for higher quantiles of the educational transfers in-kind.
I more for lower quantiles of the household earning capacity.
Our results explain how, for compulsory schooling, the dierent households'
choice of private education may motivate a government, that aims at
redistributing resources from the rich to the poor, to use public education provision
as transfers in-kind.
Reforms of the public education system that aim at changing the quality of the
publicly provided education good might alter these self-targeting mechanisms.
This does not necessarily implies that such reforms would lead to a loss in either
eciency or equity terms.
The higher the cost to the government of observing its citizens' earning capacity
the higher the necessity of an inecient self-targeting device.
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355. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
An increase in income reduces the amount of educational transfers in-kind.
I more for higher quantiles of the educational transfers in-kind.
I more for lower quantiles of the household earning capacity.
Our results explain how, for compulsory schooling, the dierent households'
choice of private education may motivate a government, that aims at
redistributing resources from the rich to the poor, to use public education provision
as transfers in-kind.
Reforms of the public education system that aim at changing the quality of the
publicly provided education good might alter these self-targeting mechanisms.
This does not necessarily implies that such reforms would lead to a loss in either
eciency or equity terms.
The higher the cost to the government of observing its citizens' earning capacity
the higher the necessity of an inecient self-targeting device.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

356. ts from Public Education Provision? TORINO 30 / 61

357. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
An increase in income reduces the amount of educational transfers in-kind.
I more for higher quantiles of the educational transfers in-kind.
I more for lower quantiles of the household earning capacity.
Our results explain how, for compulsory schooling, the dierent households'
choice of private education may motivate a government, that aims at
redistributing resources from the rich to the poor, to use public education provision
as transfers in-kind.
Reforms of the public education system that aim at changing the quality of the
publicly provided education good might alter these self-targeting mechanisms.
This does not necessarily implies that such reforms would lead to a loss in either
eciency or equity terms.
The higher the cost to the government of observing its citizens' earning capacity
the higher the necessity of an inecient self-targeting device.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

358. ts from Public Education Provision? TORINO 30 / 61

359. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
An increase in income reduces the amount of educational transfers in-kind.
I more for higher quantiles of the educational transfers in-kind.
I more for lower quantiles of the household earning capacity.
Our results explain how, for compulsory schooling, the dierent households'
choice of private education may motivate a government, that aims at
redistributing resources from the rich to the poor, to use public education provision
as transfers in-kind.
Reforms of the public education system that aim at changing the quality of the
publicly provided education good might alter these self-targeting mechanisms.
This does not necessarily implies that such reforms would lead to a loss in either
eciency or equity terms.
The higher the cost to the government of observing its citizens' earning capacity
the higher the necessity of an inecient self-targeting device.
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360. ts from Public Education Provision? TORINO 30 / 61

361. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
An increase in income reduces the amount of educational transfers in-kind.
I more for higher quantiles of the educational transfers in-kind.
I more for lower quantiles of the household earning capacity.
Our results explain how, for compulsory schooling, the dierent households'
choice of private education may motivate a government, that aims at
redistributing resources from the rich to the poor, to use public education provision
as transfers in-kind.
Reforms of the public education system that aim at changing the quality of the
publicly provided education good might alter these self-targeting mechanisms.
This does not necessarily implies that such reforms would lead to a loss in either
eciency or equity terms.
The higher the cost to the government of observing its citizens' earning capacity
the higher the necessity of an inecient self-targeting device.
Andreoli, Casalone, Sonedda (CEPS,UEP) Who bene

362. ts from Public Education Provision? TORINO 30 / 61

363. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
An increase in income reduces the amount of educational transfers in-kind.
I more for higher quantiles of the educational transfers in-kind.
I more for lower quantiles of the household earning capacity.
Our results explain how, for compulsory schooling, the dierent households'
choice of private education may motivate a government, that aims at
redistributing resources from the rich to the poor, to use public education provision
as transfers in-kind.
Reforms of the public education system that aim at changing the quality of the
publicly provided education good might alter these self-targeting mechanisms.
This does not necessarily implies that such reforms would lead to a loss in either
eciency or equity terms.
The higher the cost to the government of observing its citizens' earning capacity
the higher the necessity of an inecient self-targeting device.
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365. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
Dierent self-selection processes seem to apply at post-compulsory
education level.
For post-compulsory education families sort themselves according to
the expected returns to kid's education.
The marginal eect of income is never statistically signi

366. cant at the
80th quantile of the educational transfers in-kind distribution.
This result suggests that the quality of private schooling for
post-compulsory education, is lower that related to public schools.
For post-compulsory, public education provision, on average, is not
redistributive since for poor household the opportunity cost school of
attending schools is too high.
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368. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
Dierent self-selection processes seem to apply at post-compulsory
education level.
For post-compulsory education families sort themselves according to
the expected returns to kid's education.
The marginal eect of income is never statistically signi

369. cant at the
80th quantile of the educational transfers in-kind distribution.
This result suggests that the quality of private schooling for
post-compulsory education, is lower that related to public schools.
For post-compulsory, public education provision, on average, is not
redistributive since for poor household the opportunity cost school of
attending schools is too high.
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371. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Concluding Remarks
Dierent self-selection processes seem to apply at post-compulsory
education level.
For post-compulsory education families sort themselves according to
the expected returns to kid's education.
The marginal eect of income is never statistically signi

372. cant at the
80th quantile of the educational transfers in-kind distribution.
This result suggests that the quality of private schooling for
post-compulsory education, is lower that related to public schools.
For post-compulsory, public education provision, on average, is not
redistributive since for poor household the opportunity cost school of
attending schools is too high.
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374. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Thank you! Comments are welcomed!
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376. Motivation Outline Besley and Coate Data In-Kind Instrument Empirical Strategy Results Conclusions Appendix HH
Household Unobserved Characteristics
There is a long tradition of using family background information to directly control for
unobserved abilities in the analyses of the returns to schooling (Card,1999).
1 Grandparental Occupational Conditions: 3651 households.
I Disadvantaged Type: both grandfathers unemployed, employed in
agriculture, unskilled manual worker.
I Advantaged Type: all other cases for both grandfathers.
I Mixed Type: mixed background of the grandfathers.
2 Grandparental Level of Education: 3698 households.
I Disadvantaged Type: both grandparents (on average) with either less
than or with 5 years of education.
I Advantaged Type: both grandparents (on average) with more than 5
years of education.
I Mixed Type: mixed background of the grandparents.
Graphs
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