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Are Public Subsidies to Higher Education Regressive?

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  • William R. Johnson

    () (Department of Economics, University of Virginia)

Abstract

This article estimates the dollar amount of public higher education subsidies received by U.S. youth and examines the distribution of subsidies and the taxes that finance them across parental and student income levels. Although youths from high-income families obtain more benefit from higher education subsidies, high-income households pay sufficiently more in taxes that the net effect of the spending and associated taxation is distributionally neutral or mildly progressive. These results are robust to alternative assumptions and are consistent with Hansen and Weisbrod's earlier celebrated findings for California, although not with the conclusions often drawn from those findings. © 2006 American Education Finance Association

Suggested Citation

  • William R. Johnson, 2006. "Are Public Subsidies to Higher Education Regressive?," Education Finance and Policy, MIT Press, vol. 1(3), pages 288-315, June.
  • Handle: RePEc:tpr:edfpol:v:1:y:2006:i:3:p:288-315
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/edfp.2006.1.3.288
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    References listed on IDEAS

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    1. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-229, April.
    2. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    3. Browning, Edgar K, 1987. "On the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 77(1), pages 11-23, March.
    4. W. Lee Hansen & Burton A. Weisbrod, 1969. "The Distribution of Costs and Direct Benefits of Public Higher Education: The Case of California," Journal of Human Resources, University of Wisconsin Press, vol. 4(2), pages 176-191.
    5. Pechman, Joseph A, 1972. "Note on the Intergenerational Transfer of Public Higher-Education Benefits," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 256-259, Part II, .
    6. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 217-272.
    7. Gordon C. Winston & Yen, I.C., 1995. "Costs, Prices, Subsidies, and Aid in U.S. Higher Education," Williams Project on the Economics of Higher Education DP-32, Department of Economics, Williams College.
    8. Hansen, W Lee, 1970. "Income Distribution Effects of Higher Education," American Economic Review, American Economic Association, vol. 60(2), pages 335-340, May.
    9. Gordon C. Winston, 1995. "Capital and Capital Service Costs in 2700 US Colleges and Universities," Williams Project on the Economics of Higher Education DP-33, Department of Economics, Williams College.
    10. W. Lee Hansen & Burton A. Weisbrod, 1971. "On the Distribution of Costs and Benefits of Public Higher Education: Reply," Journal of Human Resources, University of Wisconsin Press, vol. 6(3), pages 363-374.
    11. Hartman, Robert W, 1972. "Equity Implications of State Tuition Policy and Student Loans," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 142-171, Part II, .
    12. Johnson, George E, 1984. "Subsidies for Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 303-318, July.
    13. James J. Heckman & Lance Lochner & Christopher Taber, 1999. "General Equilibrium Cost Benefit Analysis of Education and Tax Policies," NBER Working Papers 6881, National Bureau of Economic Research, Inc.
    14. Gary A. Moore, 1978. "Equity Effects of Higher Education Finance and Tuition Grants in New York State," Journal of Human Resources, University of Wisconsin Press, vol. 13(4), pages 482-501.
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    Cited by:

    1. Rainald Borck & Martin Wimbersky, 2014. "Political economics of higher education finance," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 115-139, January.
    2. Di, Zhu Xiao & Belsky, Eric & Liu, Xiaodong, 2007. "Do homeowners achieve more household wealth in the long run?," Journal of Housing Economics, Elsevier, vol. 16(3-4), pages 274-290, November.

    More about this item

    Keywords

    public subsidies; higher education;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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