This paper studies the dynamic evolution of an economy in which parents can choose to
send their child to a public or private school and vote over taxes used to fund public schools.
The objective is to study growth and the evolution of income distribution in a model where
alternative education systems coexist. In the model studied, the endogenous distribution of
income is bimodal and cannot be fully analytically characterized. Equilibrium is characterized
and the dynamics studied analytically. Simulations of the model calibrated to US data
are used to complement this analysis. A bimodal income distribution based on education
emerges. Public education student converge to a low income equilibrium while private
education students experience endogenous growth and have higher incomes. However, public
education students also experience long run growth through a spillover from the growth
experienced by private education students. the model identifies possible problems with the
existence of a private alternative to public education, such as the emergence of an eduction
based class structure. However, such an institutional setting can raise incomes and growth
relative to a compulsory public education system while still reducing income inequality.