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How income contingent loans could affect the returns to higher education: a microsimulation of the French case

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  • Pierre Courtioux

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We assess the implementation of income contingent loan (ICL) schemes for higher education in a context characterized by two main features: a formerly tuition-free system and a great heterogeneity in the quality and cost of higher education. In that case, ICL implementation leads to a trade-off between increasing "career" equity in terms of collective public spending versus individual gains and widening low education traps by reducing the incentives to pursue higher education. We rely on a dynamic microsimulation model to evaluate the degree to which low education traps are enlarged by the implementation of ICLs in France. We conclude that the risk of such traps getting larger is very low

Suggested Citation

  • Pierre Courtioux, 2012. "How income contingent loans could affect the returns to higher education: a microsimulation of the French case," Post-Print hal-00718386, HAL.
    • Handle: RePEc:hal:journl:hal-00718386
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    References listed on IDEAS

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    1. Bas Jacobs, 2002. "An investigation of education finance reform; graduate taxes and income contingent loans in the Netherlands," CPB Discussion Paper 9.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    2. 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.
    3. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 7, pages 307-458, Elsevier.
    4. N/A, 2005. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 8-30, January.
    5. Bruce Chapman & Chris Ryan, 2002. "Income-Contingent Financing of Student Charges for Higher Education: Assessing the Australian Innovation," CEPR Discussion Papers 449, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    6. Mitton,Lavinia & Sutherland,Holly & Weeks,Melvyn (ed.), 2000. "Microsimulation Modelling for Policy Analysis," Cambridge Books, Cambridge University Press, number 9780521790062, October.
    7. V. Vandenberghe & O. Debande, 2007. "Deferred and Income-contingent Tuition Fees: An Empirical Assessment using Belgian, German and UK Data," Education Economics, Taylor & Francis Journals, vol. 15(4), pages 421-440.
    8. 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.
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    Cited by:

    1. Courtioux, Pierre & Gregoir, Stéphane & Houeto, Dede, 2014. "Modelling the distribution of returns on higher education: A microsimulation approach," Economic Modelling, Elsevier, vol. 38(C), pages 328-340.
    2. Pierre Courtioux & Stéphane Gregoir & Dede Houeto, 2009. "The Simulation of the Educational Output over the Life Course: The GAMEO Model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00391393, HAL.

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    More about this item

    Keywords

    higher education; income contingent loan; microsimulation; lifetime earnings; socio-fiscal system;
    All these keywords.

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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