Redistribution and Subsidies for Higher Education
21 Pages Posted: 27 Oct 1999
Date Written: September 1999
The financing of higher education through public spending imposes a transfer of resources from taxpayers (whether or not they are users of the educational services) to the university students ans their parents. Furthermore, most of these students come from middle and upper income groups, who are, therefore, the chief recipients of such transfers of purchasing power. We provide a simple explanation for this phenomenon. We already know that the individuals who attend higher education will earn a higher level of income in the future and, as such, will pay more taxes. People whose children do not attend higher education, howevershould agree to help pay the cost of such education, providing that the taxes are sufficiently high to ensure that there will be an adequate redistribution in favor of their own children at some time in the future.
JEL Classification: D7, H2, I2
Suggested Citation: Suggested Citation