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How Income Contingent Loans could affect Return to Higher Education: a microsimulation of the French Case

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  • Courtioux, Pierre

Abstract

The paper assesses the implementation of income contingent loan schemes for higher education (ICL) in an institutional context characterized by two main features: (i) a former tuition free system and (ii) a great heterogeneity in tertiary education’s diplomas quality and cost, which impacts the individual career paths. In this particular case, ICL implementation leads to a trade-off between increasing ‘career’ equity in terms of collective public spending versus individual gains and widening low education traps by reducing the economic incentives to pursue a tertiary education curriculum. Based on a dynamic microsimulation model we propose an ex ante evaluation of the enlargement of low education traps induced by the implementation of different ICL designs in France. We conclude that the risk of low education traps’ enlargement remains very small.

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File URL: http://mpra.ub.uni-muenchen.de/14246/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14246.

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Date of creation: Jul 2008
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Handle: RePEc:pra:mprapa:14246

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Keywords: higher education; income contingent loan; microsimulation;

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  1. Bas Jacobs, 2002. "An investigation of education finance reform; graduate taxes and income contingent loans in the Netherlands," CPB Discussion Paper 9, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Heckman, James J. & Lochner, Lance & Todd, Petra E., 2005. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," IZA Discussion Papers 1700, Institute for the Study of Labor (IZA).
  3. Bruce Chapman & Chris Ryan, 2002. "Income-Contingent Financing of Student Charges for Higher Education: Assessing the Australian Innovation," CEPR Discussion Papers 449, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  4. V. Vandenberghe & O. Debande, 2007. "Deferred and Income-contingent Tuition Fees: An Empirical Assessment using Belgian, German and UK Data," Education Economics, Taylor & Francis Journals, vol. 15(4), pages 421-440.
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