Free Higher Education - Regressive Transfer or Implicit Loan ?
Should access to higher education remain â€˜freeâ€™ ? Theoretical answers to this question are at least twofold. First, public higher education is said to be regressive as a priviliged minority profits from extra human capital, and all the private benefits it generates, while the general public foots the bill. A frequent reply is that higher education students enjoying â€˜freeâ€™ access are implicitly borrowing public money that they pay back when entering the labour market, via progressive income taxes. Using a simple lifecycle framework this paper produces realistic estimates of how much graduates are likely to â€˜reimburseâ€ society via income tax. Using Belgian data on higher education public expenditure and income taxes paid by both graduates and non-graduates over their lifetime, we show that the implicit reimbursement rate ranges from 37% to 95%. It is much higher for bachelors than master graduates, and for males
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CEPR Discussion Papers
434, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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CEPR Discussion Papers
350, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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