Public Spending on Education and the Incentives for Student Achievement

23 Pages Posted: 16 Jun 2009

See all articles by William F. Blankenau

William F. Blankenau

Kansas State University - Department of Economics

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Abstract

We build a model where homogeneous workers can accumulate human capital by investing in education. Schools combine public resources and individual effort to generate productive skills. If skills are imperfectly compensated, then in equilibrium students may under-invest in effort. We examine the effect on human capital accumulation of three basic education finance policies. Increased tuition subsidies may not be beneficial because they increase enrolment but they may lower the incentives for student achievement, hence the skill level. Policies directed at enhancing the productivity of education or making degrees more informative are more successful at improving educational outcomes.

Suggested Citation

Blankenau, William F. and Camera, Gabriele, Public Spending on Education and the Incentives for Student Achievement. Economica, Vol. 76, Issue 303, pp. 505-527, July 2009. Available at SSRN: https://ssrn.com/abstract=1417646 or http://dx.doi.org/10.1111/j.1468-0335.2008.00687.x

William F. Blankenau (Contact Author)

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

Gabriele Camera

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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