Arts vs Engineering: The Choice among Consumption and Investment in Education
AbstractIn this paper we develop a model in which students choose their university courses according to both investment and consumption incentives. We show that in the private problem, the education decisions are inefficient compared to the social optimum. The result is driven by the fact that students do not consider an externality of acquiring education for investment purposes in the working environment. We show that it is possible to design tuition fees in such a way that students acquire the socially optimal level of education.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp892.
Date of creation: Jul 2013
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Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-15 (All new papers)
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