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Subsidizing Enjoyable Education

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  • Robert Dur

    ()
    (Faculty of Economics, Erasmus Universiteit Rotterdam, and CESifo, Munich)

  • Amihai Glazer

    ()
    (Department of Economics, University of California, Irvine)

Abstract

College education is not only an investment; for many people it also generates consumption benefits. If these benefits are normal goods, then the rich attend college at higher rates than the poor. Furthermore, the marginal poor student is smarter than the marginal rich student. Colleges aiming to attract smart students may therefore charge lower tuition to poorer students, even when the colleges lack market power. Moreover, when the social return to education exceeds the private return, allocative efficiency requires government grants to students to be means-tested. This discussion paper has resulted in an article in 'Labour Economics' , 2008, vol. 15(5) 1023-39.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-010/1.

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Date of creation: 21 Jan 2005
Date of revision: 29 Aug 2007
Handle: RePEc:dgr:uvatin:20050010

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Web page: http://www.tinbergen.nl

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Keywords: tuition policy; education subsidies; self-selection;

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References

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Cited by:
  1. Daniel Montolio (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)) & Amedeo Piolatto (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)), 2011. "Financing public education when altruistic agents have retirement concerns," Working Papers in Economics 268, Universitat de Barcelona. Espai de Recerca en Economia.
  2. Piolatto, Amedeo, 2010. "Education and selective vouchers," Economics of Education Review, Elsevier, vol. 29(6), pages 993-1004, December.
  3. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer, vol. 50(2), pages 417-443, June.
  4. Annette Alstadsæter, 2004. "Measuring the consumption value of higher education," Econometric Society 2004 Australasian Meetings 40, Econometric Society.
  5. Wei-Bin Zhang, 2013. "A Synthesis Of The Uzawa-Lucas Model With The Walrasian-General-Equilibrium And Neoclassical-Growth Theories," Economic Annals, Faculty of Economics, University of Belgrade, vol. 58(199), pages 7-38, October -.

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