Redistribution Through Education and Other Mechanisms Under. Capital-Market Imperfections and Uncertainty : A Welfare Effect Analysis
This paper considers a two-period model of endogenous human capital formation under the credits-market imperfection and uncertainty assumptions. We compare in the first part of the paper ex-ante and ex-post general-equilibrium effects of the education subsidy policy to those of the negative income tax and the unskilled wage subsidy regimes. We show that the education subsidy policy raises an efficiency-inequality trade-off issue, and therefore it is optimal unless the degree of inequality aversion is relatively high and financing the subsidy is not too distorsive. Public loans are often claimed to provide a solution for such issue. We explore the implications of implementing the public loan under several schemes in the second part of the paper. We show that combining between a pure public loan and education subsidies provides higher welfare levels than these two policies taken separately provided that the inequality aversion degree is high. For low degrees of inequality aversion, the pure public loan is the optimal policy.
|Date of creation:||Nov 2004|
|Date of revision:|
|Contact details of provider:|| Postal: 106 - 112 boulevard de l'Hôpital, 75647 Paris cedex 13|
Phone: 01 44 07 81 00
Fax: 01 44 07 81 09
Web page: http://mse.univ-paris1.fr/
More information through EDIRC
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.:
- Michael J. Boskin, 1975. "Notes on the Tax Treatment of Human Capital," NBER Working Papers 0116, National Bureau of Economic Research, Inc.
- Saint-Paul, G. & Verdier, T., 1991.
"Education, Democracy and growth,"
DELTA Working Papers
91-27, DELTA (Ecole normale supérieure).
- Knight, J B & Sabot, R H, 1983. "Educational Expansion and the Kuznets Effect," American Economic Review, American Economic Association, vol. 73(5), pages 1132-36, December.
- Rodrik, Dani & Alesina, Alberto, 1994.
"Distributive Politics and Economic Growth,"
4551798, Harvard University Department of Economics.
- Hanushek, Eric A. & Leung, Charles Ka Yui & Yilmaz, Kuzey, 2003.
"Redistribution through education and other transfer mechanisms,"
Journal of Monetary Economics,
Elsevier, vol. 50(8), pages 1719-1750, November.
- Eric Hanushek & Charles Ka Yui Leung & Kuzey Yilmaz, 2001. "Redistribution through Education and Other Transfer Mechanisms," NBER Working Papers 8588, National Bureau of Economic Research, Inc.
- Hanushek, Eric & Charles Ka Yui Leung & Kuzey Yilmaz, 2002. "Redistribution through Education and Other Transfer Mechanisms," Royal Economic Society Annual Conference 2002 94, Royal Economic Society.
- Oded Galor & Joseph Zeira, 2013.
"Income Distribution and Macroeconomics,"
2013-12, Brown University, Department of Economics.
- George Clarke & Lixin Colin Xu & Heng-fu Zou, 2003.
"Finance and Income Inequality: Test of Alternative Theories,"
CEMA Working Papers
493, China Economics and Management Academy, Central University of Finance and Economics.
- George Clarke & Lixin Colin Xu & Heng-fu Zou, 2013. "Finance and Income Inequality: Test of Alternative Theories," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 493-510, November.
- Clarke, George & Xu, Lixin Colin & Zou, Heng-fu, 2003. "Finance and income inequality : test of alternative theories," Policy Research Working Paper Series 2984, The World Bank.
- Richard Blundell & Thomas MaCurdy, 1998.
"Labour supply: a review of alternative approaches,"
IFS Working Papers
W98/18, Institute for Fiscal Studies.
- Benabou, Roland, 1996. "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance," American Economic Review, American Economic Association, vol. 86(3), pages 584-609, June.
- Karnit Flug & Antonio Spilimbergo & Erik Wachtenheim, 1996.
"Investment in Education: Do Economic Volatility and Credit Constraints Matter?,"
IDB Publications (Working Papers)
5698, Inter-American Development Bank.
- Flug, Karnit & Spilimbergo, Antonio & Wachtenheim, Erik, 1998. "Investment in education: do economic volatility and credit constraints matter?," Journal of Development Economics, Elsevier, vol. 55(2), pages 465-481, April.
- Karnit Flug & Antonio Spilimbergo & Erik Wachtenheim, 1996. "Investment in Education: Do Economic Volatility and Credit Constraints Matter?," Research Department Publications 4000, Inter-American Development Bank, Research Department.
- Lans Bovenberg, A. & Jacobs, Bas, 2005.
"Redistribution and education subsidies are Siamese twins,"
Journal of Public Economics,
Elsevier, vol. 89(11-12), pages 2005-2035, December.
- Bovenberg, A.L. & Jacobs, B., 2001. "Redistribution and Education Subsidies are Siamese Twins," Discussion Paper 2001-82, Tilburg University, Center for Economic Research.
- Bovenberg, A Lans & Jacobs, Bas, 2001. "Redistribution and Education Subsidies are Siamese Twins," CEPR Discussion Papers 3099, C.E.P.R. Discussion Papers.
- 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.
- Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 311-335.
- Persson, Torsten & Tabellini, Guido, 1994.
"Is Inequality Harmful for Growth?,"
American Economic Review,
American Economic Association, vol. 84(3), pages 600-621, June.
- Edward P. Lazear, 1980.
"Family Background and Optimal Schooling Decision,"
NBER Working Papers
0141, National Bureau of Economic Research, Inc.
- Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
- Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
- Daniele Checchi, 2003.
"Inequality in Incomes and Access to Education: A Cross-country Analysis (1960-95),"
CEIS, vol. 17(2), pages 153-201, 06.
- Daniele Checchi, 1999. "Inequality in Incomes and Access to Education. A Cross-Country Analysis (1960-95)," Development Working Papers 125, Centro Studi Luca d'Agliano, University of Milano.
- Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 249-262.
- Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
- Nielsen, Soren Bo & Sorensen, Peter Birch, 1997. "On the optimality of the Nordic system of dual income taxation," Journal of Public Economics, Elsevier, vol. 63(3), pages 311-329, February.
- John Fender & Ping Wang, 2003.
"Educational Policy in a Credit Constrained Economy with Skill Heterogeneity,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 939-964, 08.
- John Fender & Ping Wang, 2001. "Educational Policy in a Credit Constrained Economy with Skill Heterogeneity," Vanderbilt University Department of Economics Working Papers 0133, Vanderbilt University Department of Economics.
- Orazem, Peter & Tesfatsion, Leigh S., 1997.
"Macrodynamic Implications of Income Transfer Policies for Human Capital Investment and School Effort,"
Staff General Research Papers
1683, Iowa State University, Department of Economics.
- Orazem, Peter & Tesfatsion, Leigh, 1997. "Macrodynamic Implications of Income-Transfer Policies for Human Capital Investment and School Effort," Journal of Economic Growth, Springer, vol. 2(3), pages 305-29, September.
- Eckhard Janeba, 2000. "Trade, Income Inequality, and Government Policies: Redistribution of Income or Education Subsidies?," NBER Working Papers 7485, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:mse:wpsorb:bla04110. 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: (Lucie Label)
If references are entirely missing, you can add them using this form.