Private Investment in Higher Education: Comparing Alternative Funding Schemes
University of Bielefeld - Department of Business Administration and Economics
Tel Aviv University - Eitan Berglas School of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
CESifo Working Paper Series No. 2395
This paper uses an overlapping generations framework to analyze the implications of different financing regimes in the education sector for human capital formation and economic welfare. Agents privately invest in education after they have received a noisy information signal about their abilities. The incentives of the individuals to invest in education are determined by the financing regime under which the economy operates. The paper analyzes and compares three financing regimes. Under each regime, the payback obligation of an educational loan is contingent, to some extent, on an individual's future income.
Number of Pages in PDF File: 34
Keywords: higher education, funding regimes, human capital, welfare
JEL Classification: D31, D91, H31, I22working papers series
Date posted: September 25, 2008
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