As long ago as 1890, Alfred Marshall, the leading English economist at that time, wrote that ‘there are few practical problems in which the economist has a more direct interest than those relating to the principles on which the expense of education of children should be divided between the State and the parents’.1 Since Marshall’s time this problem has continued to exercise the minds of economists and others concerned with the financial arrangements by which resources are allocated to education — without any agreed answer being found. At the same time, the growth in the size and diversity of the education system (which now serves the needs of nursery school to university postgraduate students, and accounts for about 5 per cent of the total national income produced within the United Kingdom each year) has meant that the question ‘How should we allocate resources to education?’ has assumed even more pressing importance.
KeywordsExternal Cost Market System Voucher Scheme Income Limitation External Benefit
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