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Subsidizing Enjoyable Education

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  • Robert Dur

    (Faculty of Economics, Erasmus Universiteit Rotterdam, and CESifo, Munich)

  • Amihai Glazer

    (Department of Economics, University of California, Irvine)

Abstract

College education is not only an investment; for many people it also generates consumption benefits. If these benefits are normal goods, then the rich attend college at higher rates than the poor. Furthermore, the marginal poor student is smarter than the marginal rich student. Colleges aiming to attract smart students may therefore charge lower tuition to poorer students, even when the colleges lack market power. Moreover, when the social return to education exceeds the private return, allocative efficiency requires government grants to students to be means-tested. This discussion paper has resulted in an article in 'Labour Economics' , 2008, vol. 15(5) 1023-39.

Suggested Citation

  • Robert Dur & Amihai Glazer, 2005. "Subsidizing Enjoyable Education," Tinbergen Institute Discussion Papers 05-010/1, Tinbergen Institute, revised 29 Aug 2007.
    • Handle: RePEc:tin:wpaper:20050010
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    Cited by:

    1. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 417-443, June.
    2. Wei-Bin Zhang, 2013. "A Synthesis Of The Uzawa-Lucas Model With The Walrasian-General-Equilibrium And Neoclassical-Growth Theories," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 58(199), pages 7-38, October -.
    3. Daniel Montolio & Amedeo Piolatto, 2011. "Financing public education when altruistic agents have retirement concerns," Working Papers 2011/30, Institut d'Economia de Barcelona (IEB).
    4. Annette Alstadsæter, 2011. "Measuring the Consumption Value of Higher Education," CESifo Economic Studies, CESifo Group, vol. 57(3), pages 458-479, September.
    5. Daniel Montolio & Amedeo Piolatto, 2011. "Financing public education when altruistic agents have retirement concerns," Working Papers 2011/30, Institut d'Economia de Barcelona (IEB).
    6. Daniel Montolio (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)) & Amedeo Piolatto (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)), 2011. "Financing public education when altruistic agents have retirement concerns," Working Papers in Economics 268, Universitat de Barcelona. Espai de Recerca en Economia.
    7. Piolatto, Amedeo, 2010. "Education and selective vouchers," Economics of Education Review, Elsevier, vol. 29(6), pages 993-1004, December.
    8. Wei Bin ZHANG, 2016. "Oscillations In The Walrasian General Equilibrium Theory With Endogenous Wealth And Human Capital Accumulation," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 5(1), pages 1-41, January.

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    More about this item

    Keywords

    tuition policy; education subsidies; self-selection;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I2 - Health, Education, and Welfare - - Education

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