Insuring Educational Risk: Opportunities versus Income∗
نویسندگان
چکیده
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. JEL-Classification: H21, I2, J2
منابع مشابه
Insuring Educational Risk: "It is the Quality of Education"
We develop a model of education where individuals face educational risk. Successfully entering the skilled labor sector depends on individual effort in education and public resources, but educational risk still causes (income) inequality. We show that in a Second-best setting improving quality of education, i.e., the probability of success, by public funding of the educational sector matters mo...
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