IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/2090.html
   My bibliography  Save this paper

Equal Opportunities in Education: Market Equilibrium and Public Policy

Author

Listed:
  • De Fraja, Gianni

Abstract

This paper investigates whether individual decisions lead to equality of opportunity in education, defined in the specific sense of irrelevance of parental income for university attendance. We show that, even if households can borrow in the capital market, the laissez-faire equilibrium exhibits an income bias, in the sense that individuals from high income households are more likely to attend university. We then study the welfare maximising policy of a utilitarian government. Its features are opposite to the free market equilibrium: with plausible assumptions, at low income levels, the tuition fee should be designed in such a way so as to create a bias in favour of low income households.

Suggested Citation

  • De Fraja, Gianni, 1999. "Equal Opportunities in Education: Market Equilibrium and Public Policy," CEPR Discussion Papers 2090, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2090
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2090
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barr, Nicholas, 1993. "Alternative funding resources for higher education," LSE Research Online Documents on Economics 280, London School of Economics and Political Science, LSE Library.
    2. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    3. Boldrin, Michele, 2005. "Public education and capital accumulation," Research in Economics, Elsevier, vol. 59(2), pages 85-109, June.
    4. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    5. P. Hare & D. Ulph, 1981. "Imperfect capital markets and the public provision of education," Public Choice, Springer, vol. 36(3), pages 481-507, January.
    6. Lazear, Edward, 1977. "Academic Achievement and Job Performance: Note," American Economic Review, American Economic Association, vol. 67(2), pages 252-254, March.
    7. Chapman, Bruce, 1997. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 738-751, May.
    8. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-867, June.
    9. Lommerud, Kjell Erik, 1989. "Educational Subsidies When Relative Income Matters," Oxford Economic Papers, Oxford University Press, vol. 41(3), pages 640-652, July.
    10. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586.
    11. Barr, Nicholas, 1993. "Alternative Funding Resources for Higher Education," Economic Journal, Royal Economic Society, vol. 103(418), pages 718-728, May.
    12. Kenneth J. Arrow, 1971. "A Utilitarian Approach to the Concept of Equality in Public Expenditures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(3), pages 409-415.
    13. Barr, Nicholas, 1997. "Student loans : towards a new public/private mix," LSE Research Online Documents on Economics 282, London School of Economics and Political Science, LSE Library.
    14. Johnson, George E, 1984. "Subsidies for Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 303-318, July.
    15. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    16. von Weizsäcker, Robert K & Wigger, Berthold, 1998. "Risk, Resources and Education," CEPR Discussion Papers 1808, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giorgio Brunello & Massimo Giannini, 2004. "Stratified or Comprehensive? The Economic Efficiency of School Design," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(2), pages 173-193, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander Kemnitz, 2007. "University Funding Reform, Competition, and Teaching Quality," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 356-378, June.
    2. Gianni De Fraja, 2004. "Education and Redistribution," Rivista di Politica Economica, SIPI Spa, vol. 94(3), pages 3-44, May-June.
    3. Robert J. Gary-Bobo & Alain Trannoy, 2015. "Optimal student loans and graduate tax under moral hazard and adverse selection," RAND Journal of Economics, RAND Corporation, vol. 46(3), pages 546-576, September.
    4. Robert J. Gary-Bobo & Alain Trannoy, 2005. "Efficient Tuition & Fees, Examinations, and Subsidies," IDEP Working Papers 0501, Institut d'economie publique (IDEP), Marseille, France, revised 01 Mar 2005.
    5. Bas Jacobs & Sweder J. G. van Wijnbergen, 2007. "Capital-Market Failure, Adverse Selection, and Equity Financing of Higher Education," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(1), pages 1-32, March.
    6. Kemnitz, Alexander, 2003. "Funding, Competition and Quality in Higher Education," Discussion Papers 610, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    7. Bas Jacobs, 2002. "An investigation of education finance reform; graduate taxes and income contingent loans in the Netherlands," CPB Discussion Paper 9, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Bernhard Eckwert & Itzhak Zilcha, 2017. "Student loans: When is risk sharing desirable?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(2), pages 217-231, June.
    9. repec:lan:wpaper:2434 is not listed on IDEAS
    10. Booij, Adam S. & Leuven, Edwin & Oosterbeek, Hessel, 2012. "The role of information in the take-up of student loans," Economics of Education Review, Elsevier, vol. 31(1), pages 33-44.
    11. Migali, Giuseppe, 2012. "Funding higher education and wage uncertainty: Income contingent loan versus mortgage loan," Economics of Education Review, Elsevier, vol. 31(6), pages 871-889.
    12. Fleurbaey, Marc & Gary-Bobo, Robert J. & Maguain, Denis, 2002. "Education, distributive justice, and adverse selection," Journal of Public Economics, Elsevier, vol. 84(1), pages 113-150, April.
    13. Romano, Richard E. & Tampieri, Alessandro, 2016. "Arts vs engineering: Choosing consumption of and investment in education," Research in Economics, Elsevier, vol. 70(3), pages 493-510.
    14. Randall P. Ellis & Ching‐to Albert Ma, 2011. "Health insurance, cost expectations, and adverse job turnover," Health Economics, John Wiley & Sons, Ltd., vol. 20(1), pages 27-44, January.
    15. Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(2), pages 249-262.
    16. Michael D. Grubb, 2009. "Selling to Overconfident Consumers," American Economic Review, American Economic Association, vol. 99(5), pages 1770-1807, December.
    17. Carmen Bevia & Inigo Iturbe–Ormaetxe, 2002. "Redistribution and Subsidies for Higher Education," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(2), pages 321-340, June.
    18. repec:lan:wpaper:2436 is not listed on IDEAS
    19. Raquel Fernandez & Richard Rogerson, 1992. "Human Capital Accumulation and Income Distribution," NBER Working Papers 3994, National Bureau of Economic Research, Inc.
    20. repec:lan:wpaper:2660 is not listed on IDEAS
    21. Barr, Nicholas, 2004. "Higher education funding," LSE Research Online Documents on Economics 288, London School of Economics and Political Science, LSE Library.
    22. Panu Poutvaara, 2003. "Educating Europe," Public Economics 0302008, University Library of Munich, Germany.
    23. Frank Kupferschmidt & Berthold U. Wigger, 2006. "Öffentliche versus private Finanzierung der Hochschulbildung: Effizienz‐ und Verteilungsaspekte," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(2), pages 285-307, May.

    More about this item

    Keywords

    Education; student loans; University;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:2090. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.