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Easy-Come-Easy-Go: Moral Hazard in the Context of Return to Education

  • Rosemary Walker

    ()

  • Liviu Florea

    ()

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    This empirical study advances the understanding of the theory of investment in human capital by outlining limitations to its applicability in the context of return to education. The study uses the concept of moral hazard to examine circumstances when financial support for education purpose generates less desirable post-graduation incomes. This study explores the relationship between financial support and post-graduation incomes using data from the Survey of Income and Program Participation that is designed to measure the economic situation of individuals. Results suggest that students are less likely to engage in moral hazardous behavior to the degree to which they are older and to the degree to which they receive costlier financial assistance. Copyright Springer Science+Business Media Dordrecht 2014

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    File URL: http://hdl.handle.net/10.1007/s10551-013-1656-8
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    Article provided by Springer in its journal Journal of Business Ethics.

    Volume (Year): 120 (2014)
    Issue (Month): 2 (March)
    Pages: 201-217

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    Handle: RePEc:kap:jbuset:v:120:y:2014:i:2:p:201-217
    Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100281

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    1. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, June.
    2. Pauly, Mark V, 1974. "Overinsurance and Public Provision of Insurance: The Roles of Moral Hazard and Adverse Selection," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 44-62, February.
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    7. Gary D. Hansen & Ayse Imrohoroglu, 1990. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," UCLA Economics Working Papers 583, UCLA Department of Economics.
    8. Vogel, Jonathan, 2007. "Institutions and moral hazard in open economies," Journal of International Economics, Elsevier, vol. 71(2), pages 495-514, April.
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    14. Alessandro Cigno & Annalisa Luporini, 2003. "Scholarships or Student Loans? Subsidizing Higher Education in the Presence of Moral Hazard," CESifo Working Paper Series 973, CESifo Group Munich.
    15. David Neumark & Paul Taubman, 1994. "Why Do Wage Profiles Slope Upwards? Tests of the General Human Capital Model," NBER Working Papers 4688, National Bureau of Economic Research, Inc.
    16. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    17. Johnson, Richard W & Neumark, David, 1996. "Wage Declines among Older Men," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 740-48, November.
    18. Miller, Paul & Mulvey, Charles & Martin, Nick, 2006. "The return to schooling: Estimates from a sample of young Australian twins," Labour Economics, Elsevier, vol. 13(5), pages 571-587, October.
    19. Bodvarsson, Orn B. & Walker, Rosemary L., 2004. "Do parental cash transfers weaken performance in college?," Economics of Education Review, Elsevier, vol. 23(5), pages 483-495, October.
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