Insuring Educational Risk: Opportunities versus Income ∗
| Title: | Insuring Educational Risk: Opportunities versus Income ∗ |
|---|---|
| Authors: | Dirk Schindler; Universität Konstanz; Benjamin Weigert; Justus-liebig-universität Gießen; Jel-classification H |
| Contributors: | The Pennsylvania State University CiteSeerX Archives |
| Source: | http://www.ecore.be/Papers/1204886623.pdf. |
| Publication Year: | 2008 |
| Collection: | CiteSeerX |
| Subject Terms: | human capital investment; endogenous risk; learning effort; optimal taxation; public education |
| Description: | We develop a model of education where individuals face educational risk. Successful graduation depends on individual effort to study and public resources. After realization of risk, they either work as skilled or as unskilled worker. We show that an optimal public policy consists of tuition fees combined with skill-contingent loans, lump-sum transfers/taxes, and public funding of the educational sector. We argue that improved educational opportunities matter more than direct income transfers in a Second-best setting. Contrary to standard models in case of income risk, it is not optimal to use a proportional wage tax, because skill-contingent loans and public education spending provide simultaneously insurance and redistribution at lower costs. A wage tax is only optimal, if tuition fees are not available. |
| Document Type: | text |
| File Description: | application/pdf |
| Language: | English |
| Relation: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.375.6361; http://www.ecore.be/Papers/1204886623.pdf |
| Availability: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.375.6361; http://www.ecore.be/Papers/1204886623.pdf |
| Rights: | Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: | edsbas.B2D136AD |
| Database: | BASE |