Life in shakles? The quantitative implications of reforming the educational financing system
We conduct a quantitative analysis of educational financing systems in a stochastic overlapping generations model in which human capital can be enhanced through both formal schooling and learning-by-doing. The model is calibrated to the United States economy, including a stylized version of its student loan system. We find that moving to an income-contingent educational financing system, whereby transfers to students are financed from taxes on labor income, generates aggregate welfare gains. Such a system improves risk-sharing among college graduates and incentivizes individuals to obtain more education. These positive effects overturn the negative impact from labor supply distortions. Reforming the educational financing system towards income contingency, however, generates a considerable amount of transitional dynamics, so that welfare gains and losses are distributed unevenly across generations. (Copyright: Elsevier)
Volume (Year): 25 (2017)
Issue (Month): (April)
|Contact details of provider:|| Postal: Marina Azzimonti, Department of Economics, Stonybrook University, 10 Nicolls Road, Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/red/
More information through EDIRC
|Order Information:|| Web: https://www.economicdynamics.org/subscription-information/ Email: |
When requesting a correction, please mention this item's handle: RePEc:red:issued:16-86. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)
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.