Why did Education Become Publicly Funded? Evidence from the Nineteenth-Century Growth of Public Primary Schooling in the United States

Abstract

Why do voters publicly fund education? I examine two explanations: public funds may be a means for decisive voters to transfer wealth tothemselvesor voters may subsidize the education ofothersto raise social education levels and realize external benefits. I test these theories in the 1800s, when full tax support of primary schools emerged. States where median and mean wealth was closer together had higher fractions of education revenue from public sources. Attendance rates rose when the public share of education funding rose, especially for poor children. These facts are consistent with a model with external benefits of education.