Choosing the type of income-contingent loan: risk-sharing versus risk-pooling
This paper analyses the choice between risk-sharing and risk-pooling income-contingent loans for higher education of risk-averse individuals who differ in their ability to benefit from education and inherited wealth. The paper identifies the possible outcomes of a majority vote between the two income-contingent schemes and provides several examples where the risk-pooling income-contingent loan is preferred. The paper then discusses the implications on participation and voting outcomes if successful graduates are mobile and provides examples where the riskpooling income-contingent loan remains being preferred. Risk-pooling schemes can however be prone to adverse selection problems, particularly if students are mobile. The paper explores the implications of allowing students to opt out of the riskpooling income-contingent loan for a pure loan. It shows that risk-pooling income-contingent loans can be sustained even when some students opt out.
|Date of creation:||2014|
|Date of revision:|
|Contact details of provider:|| Postal: Carrer del Tinent Coronel Valenzuela 1-11, 08034 Barcelona|
Phone: 93 403 46 46
Fax: 93 403 98 32
Web page: http://www.ieb.ub.edu
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Del Rey, Elena & Racionero, María, 2010.
"Financing schemes for higher education,"
European Journal of Political Economy,
Elsevier, vol. 26(1), pages 104-113, March.
- Maria Racionero & Elena Del Rey, 2006. "Financing schemes for higher education," ANU Working Papers in Economics and Econometrics 2006-460, Australian National University, College of Business and Economics, School of Economics.
- DEL REY, Elena & RACIONERO, Maria, . "Financing schemes for higher education," CORE Discussion Papers RP 2181, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Rainald Borck & Martin Wimbersky, 2009.
"Political Economics of Higher Education Finance,"
CESifo Working Paper Series
2829, CESifo Group Munich.
- Elena Del Rey, 2011. "Deferring higher education fees without relying on contributions from non-students," Education Economics, Taylor & Francis Journals, vol. 20(5), pages 510-521, May.
- Poutvaara, Panu, 2001.
"Alternative tax constitutions and risky education in a federation,"
Regional Science and Urban Economics,
Elsevier, vol. 31(2-3), pages 355-377, April.
- Poutvaara, Panu, 2001. "Alternative tax constitutions and risky education in a federation," Munich Reprints in Economics 19302, University of Munich, Department of Economics.
- De Fraja, Gianni, 2001. "Education Policies: Equity, Efficiency and Voting Equilibrium," Economic Journal, Royal Economic Society, vol. 111(471), pages C104-19, May.
- Dan Anderberg & Alessandro Balestrino, 2008. "The Political Economy of Post-Compulsory Education Policy with Endogenous Credit Constraints," CESifo Working Paper Series 2304, CESifo Group Munich.
- Elena Del Rey & María Racionero, 2012.
"Voting On Income‐Contingent Loans For Higher Education,"
The Economic Record,
The Economic Society of Australia, vol. 88(s1), pages 38-50, 06.
- Elena Del Rey & Maria Racionero, 2011. "Voting on income-contingent loans for higher education," ANU Working Papers in Economics and Econometrics 2011-549, Australian National University, College of Business and Economics, School of Economics.
- Poutvaara, Panu, 2004.
"Educating Europe: Should Public Education be Financed with Graduate Taxes or Income-contingent Loans?,"
Munich Reprints in Economics
19296, University of Munich, Department of Economics.
- Panu Poutvaara, 2004. "Educating Europe: Should Public Education be Financed with Graduate Taxes or Income-contingent Loans?," CESifo Economic Studies, CESifo, vol. 50(4), pages 663-684.
- Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2014.
"Financing Higher Education in a Mobile World,"
PSE - Labex "OSE-Ouvrir la Science Economique"
- Chapman, Bruce, 2006.
"Income Contingent Loans for Higher Education: International Reforms,"
Handbook of the Economics of Education,
- Bruce Chapman, 2005. "Income Contingent Loans for Higher Education: International Reform," CEPR Discussion Papers 491, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Garcia-Penalosa, Cecilia & Walde, Klaus, 2000. "Efficiency and Equity Effects of Subsidies to Higher Education," Oxford Economic Papers, Oxford University Press, vol. 52(4), pages 702-22, October.
- Panu Poutvaara, 2003.
- Alexander Kemnitz, 2010.
"Educational Federalism and the Quality Effects of Tuition Fees,"
CESifo Working Paper Series
3193, CESifo Group Munich.
- Kemnitz, Alexander, 2005. "Educational Federalism and the Quality Effects of Tuition Fees," Discussion Papers 617, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
- Kemnitz, Alexander, 2007. "Educational Federalism and the Quality Effects of Tuition Fees," Dresden Discussion Paper Series in Economics 08/07, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
- Nerlove, Marc L, 1975. "Some Problems in the Use of Income-contingent Loans for the Finance of Higher Education," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 157-83, February.
- Panu Poutvaara, 2008.
"Public and Private Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 110(3), pages 591-608, 09.
- Poutvaara, Panu, 2008. "Public and private education in an integrated Europe: Studying to migrate and teaching to stay?," Munich Reprints in Economics 19802, University of Munich, Department of Economics.
- Thomas Lange, 2009. "Public Funding of Higher Education when Students and Skilled Workers are Mobile," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(2), pages 178-199, June.
When requesting a correction, please mention this item's handle: RePEc:ieb:wpaper:2013/6/doc2014-7. 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: ()
If references are entirely missing, you can add them using this form.