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Voting On Income-Contingent Loans For Higher Education

Del Rey, Elena; Racionero, Maria

Description

We consider risk-averse individuals who differ in two characteristics - ability to benefit from education and inherited wealth - and analyse higher education participation under two alternative financing schemes - tax subsidy and (risk-sharing) income-contingent loans. With decreasing absolute risk aversion, wealthier individuals are more likely to undertake higher education despite the fact that, according to the stylised financing schemes we consider, individuals do not pay any upfront...[Show more]

dc.contributor.authorDel Rey, Elena
dc.contributor.authorRacionero, Maria
dc.date.accessioned2015-12-08T22:44:50Z
dc.identifier.issn0013-0249
dc.identifier.urihttp://hdl.handle.net/1885/37574
dc.description.abstractWe consider risk-averse individuals who differ in two characteristics - ability to benefit from education and inherited wealth - and analyse higher education participation under two alternative financing schemes - tax subsidy and (risk-sharing) income-contingent loans. With decreasing absolute risk aversion, wealthier individuals are more likely to undertake higher education despite the fact that, according to the stylised financing schemes we consider, individuals do not pay any upfront financial cost of education. We then determine which financing scheme arises when individuals are allowed to vote between schemes. We show that the degree of risk aversion plays a crucial role in determining which financing scheme obtains a majority, and that the composition of the support group for each financing scheme can be of two different types.
dc.publisherBlackwell Publishing Ltd
dc.sourceThe Economic Record
dc.subjectKeywords: cost; financial system; higher education; subsidy system; tax system
dc.titleVoting On Income-Contingent Loans For Higher Education
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume88
dc.date.issued2012
local.identifier.absfor140204 - Economics of Education
local.identifier.absfor140104 - Microeconomic Theory
local.identifier.ariespublicationU9501697xPUB150
local.type.statusPublished Version
local.contributor.affiliationDel Rey, Elena, Universitat de Girona
local.contributor.affiliationRacionero, Maria, College of Business and Economics, ANU
local.description.embargo2037-12-31
local.bibliographicCitation.issueSpecial Issue, June 2012
local.bibliographicCitation.startpage38
local.bibliographicCitation.lastpage50
local.identifier.doi10.1111/j.1475-4932.2012.00801.x
local.identifier.absseo910202 - Human Capital Issues
dc.date.updated2016-02-24T12:00:28Z
local.identifier.scopusID2-s2.0-84862891075
local.identifier.thomsonID000305751100005
CollectionsANU Research Publications

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