We study the macroeconomic impacts produced by different allocations of public expenditures across schools and universities in a developing country. We construct a general equilibrium model featuring heterogeneous agents, credit restrictions, basic and higher education, public and private educational institutions. The model is calibrated to fit Brazilian data. Simulating a reallocation of governmental expenditures from public colleges toward public schools may lead to relevant gains in terms of GDP, inequality, and welfare. The efficacy of this policy depends on whether the new allocation of expenditures is paired with higher-quality public schools. We also simulate a school voucher policy that resembles the Chilean experience in terms of program scale and voucher payment magnitude. In comparison with the previous policy, school vouchers produce larger impacts on GDP, inequality, social mobility, and welfare.