Education Budget Reductions Via Tax Credits: Some Further Considerations

Abstract

Donald Frey shows that estimates of cost savings induced by tuition tax credits are very sensitive to the demand and supply elasticities for private education. Conse quently the authors survey the literatures on these elasticities to try to determine an appropriate range. They also develop models of donor and school behavior to show that the donations made to private schools do not necessarily imply small supply elasticities. Other considerations, such as the transfer of existing public school resources to the private system and underestimates of costs in the public system, are also discussed