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Borrowing Constraints, College Aid, and Intergenerational Mobility

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  • Eric Hanushek

    (Stanford University)

  • Charles Ka Yui Leung

    (City University of Hong Kong)

  • Kuzey Yilmaz

    (University of Rochester)

Abstract

This paper provides a consistent comparison of general tuition subsidies, need-based student aid, merit-based student aid, and income-contingent loans (ICL). Each of these policies is analyzed through a dynamic general equilibrium model in which individuals differ in family wealth and opportunities of completing college. The overlapping-generation structure of the model permits evaluation of different aid schemes in their implications on the aggregate outcomes, income distribution, and intergenerational mobility. Compared to current US tuition and loan policies, the ICL and need-based policies are most effective in promoting aggregate efficiency and income equality, while merit-based policies are least effective.

(This abstract was borrowed from another version of this item.)

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File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_581.pdf
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Bibliographic Info

Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 581.

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Length: 24 pages
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:roc:rocher:581

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Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

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References

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Citations

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Cited by:
  1. Hanushek, Eric A. & Leung, Charles Ka Yui & Yilmaz, Kuzey, 2003. "Redistribution through education and other transfer mechanisms," Journal of Monetary Economics, Elsevier, Elsevier, vol. 50(8), pages 1719-1750, November.
  2. Christoph Winter, 2009. "Accounting for the changing role of family income in determining college entry," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 402, Institute for Empirical Research in Economics - University of Zurich, revised Dec 2011.
  3. Charles Ka-Yui Leung & Nan-Kuang Chen, 2005. "Intrinsic Cycles of Land Price: A Simple Model," Departmental Working Papers, Chinese University of Hong Kong, Department of Economics _166, Chinese University of Hong Kong, Department of Economics.
  4. repec:ebl:ecbull:v:15:y:2005:i:11:p:1-9 is not listed on IDEAS
  5. Laura Romero, 2005. "On the role of borrowing constraints in public and private universities' choices," Economics Bulletin, AccessEcon, vol. 9(6), pages 1-8.
  6. Flavio Cunha & James J. Heckman & Lance Lochner & Dimitriy V. Masterov, 2005. "Interpreting the Evidence on Life Cycle Skill Formation," NBER Working Papers 11331, National Bureau of Economic Research, Inc.
  7. repec:ebl:ecbull:v:9:y:2005:i:6:p:1-8 is not listed on IDEAS
  8. Jorge Soares, 2008. "Borrowing Constraints, Parental Altruism and Welfare," Working Papers, University of Delaware, Department of Economics 08-12, University of Delaware, Department of Economics.
  9. Bruce Chapman, 2005. "Income Contingent Loans for Higher Education: International Reform," CEPR Discussion Papers, Centre for Economic Policy Research, Research School of Economics, Australian National University 491, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  10. Kazumasa Oguro & Takashi Oshio & Junichiro Takahata, 2013. "Ability transmission, endogenous fertility and educational subsidy," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 45(17), pages 2469-2479, June.
  11. Kuzey Yilmaz, 2014. "On the Importance of Fertility Behavior in School Finance Policy Design," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 1403, Koc University-TUSIAD Economic Research Forum.

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