Arts vs Engineering: The Choice among Consumption of and Investment in Education
In this paper we develop a model in which students choose their university coursework based on both investment and consumption incentives. We show that these education decisions are socially inefficient. This result is driven by the fact that students do not consider an externality in the working environment of acquiring education for investment purposes. We show when and how it is possible to design tuition fees in such a way that students acquire the socially optimal level of education.
|Date of creation:||Jul 2013|
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- Jo Blanden & Stephen Machin, 2004. "Educational inequality and the expansion of UK higher education," LSE Research Online Documents on Economics 17497, London School of Economics and Political Science, LSE Library.
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- Panzar, John C & Willig, Robert D, 1976. "Vindication of a "Common Mistake" in Welfare Economics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1361-1363, December.
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