The Political Economy of Post-Compulsory Education Policy with Endogenous Credit Constraints
AbstractAltruistic parents, who differ in income, make financial transfers to their children, who differ in ability. The children invest in post-compulsory education, subject to an endogenous credit constraint, and taking policy as given. There are two policy tools: a subsidy to those who participate in education and a proportional income tax. Not all children participate; a larger subsidy encourages participation, and a larger income tax discourages it. The parents, prior to making transfers, vote on policy. A voting equilibrium, if it exists, is such that voters in the two tails of the income distribution support a reduction, while the “middle-class” supports an expansion, of the education subsidy. Public support of education is a policy with regressive elements as it entails, among other things, a redistribution from the poor to the middle-earners. We characterise a local equilibrium analytically, verify its existence numerically, and finally perform a number of comparative statics exercises.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2304.
Date of creation: 2008
Date of revision:
Find related papers by JEL classification:
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
- Jo Blanden & Paul Gregg & Stephen Machin, 2003. "Changes in Educational Inequality," The Centre for Market and Public Organisation 03/079, Department of Economics, University of Bristol, UK.
- Jo Blanden & Stephen Machin, 2013.
"Educational Inequality and The Expansion of UK Higher Education,"
Scottish Journal of Political Economy,
Scottish Economic Society, vol. 60(5), pages 578-596, November.
- Jo Blanden & Stephen Machin, 2004. "Educational Inequality and the Expansion of UK Higher Education," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(2), pages 230-249, 05.
- James Heckman & Pedro Carneiro, 2003.
"Human Capital Policy,"
NBER Working Papers
9495, National Bureau of Economic Research, Inc.
- Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
- Dearden, Lorraine & Machin, Stephen & Reed, Howard, 1997.
"Intergenerational Mobility in Britain,"
Royal Economic Society, vol. 107(440), pages 47-66, January.
- Lorraine Dearden & Steve Machin & Howard Reed, 1995. "Intergenerational mobility in Britain," IFS Working Papers W95/20, Institute for Fiscal Studies.
- Lorraine Dearden & Stephen Machin & H Reed, 1996. "Intergenerational Mobility in Britain," CEP Discussion Papers dp0281, Centre for Economic Performance, LSE.
- Raquel Fernandez & Richard Rogerson, 1994.
"On the political economy of education subsidies,"
185, Federal Reserve Bank of Minneapolis.
- Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
- Lance Lochner & Alexander Monge-Naranjo, 2002. "Human Capital Formation with Endogenous Credit Constraints," NBER Working Papers 8815, National Bureau of Economic Research, Inc.
- Elena Del Rey & María Racionero, 2014.
"Choosing the type of income-contingent loan: risk-sharing versus risk-pooling,"
2014/7, Institut d'Economia de Barcelona (IEB).
- Maria Racionero & Elena Del Rey, 2012. "Choosing the type of income-contingent loan: risk-sharing versus risk-pooling," CEPR Discussion Papers 671, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Rainald Borck & Silke Uebelmesser & Martin Wimbersky, 2012.
"The Political Economics of Higher Education Finance for Mobile Individuals,"
CESifo Working Paper Series
3877, CESifo Group Munich.
- Übelmesser, Silke & Borck, Rainald & Wimbersky, Martin, 2013. "The Political Economics of Higher Education Finance for Mobile Individuals," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79717, Verein für Socialpolitik / German Economic Association.
- Rainald Borck & Martin Wimbersky, 2014.
"Political economics of higher education finance,"
Oxford Economic Papers,
Oxford University Press, vol. 66(1), pages 115-139, January.
- Jordi Jofre-Monseny & Martin Wimbersky, 2010. "Political economics of higher education finance," Working Papers 2010/17, Institut d'Economia de Barcelona (IEB).
- Rainald Borck & Martin Wimbersky, 2009. "Political Economics of Higher Education Finance," CESifo Working Paper Series 2829, CESifo Group Munich.
- Elena Del Rey & Maria Racionero, 2011.
"Voting on income-contingent loans for higher education,"
ANU Working Papers in Economics and Econometrics
2011-549, Australian National University, College of Business and Economics, School of Economics.
- Elena Del Rey & María Racionero, 2012. "Voting On Income‐Contingent Loans For Higher Education," The Economic Record, The Economic Society of Australia, vol. 88(s1), pages 38-50, 06.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.