Education and Borrowing Constraints: Tests vs. Prices

Raquel Fernandez ()

No 6588, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the properties of exams and markets as alternative allocation devices under borrowing constraints. Exams dominate markets in terms of matching efficiency. Whether aggregate consumption is greater under exams than under markets depends on the power of the exam technology; for a sufficiently powerful test, exams dominate markets in terms of aggregate consumption as well. The positive effects of income taxation are analyzed and the optimal allocation scheme when wealth is observable is derived. The latter consists of a fellowship scheme in which markets set school prices but the government gives out fellowships based on need and the ability to obtain a given exam score.

JEL-codes: D52 E44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pub
Date: 1998-06
Note: PE
View list of references View citations in EconPapers

Downloads: (external link)
http://www.nber.org/papers/w6588.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

Related works:
Working Paper: Education and Borrowing Constraints: Tests vs Prices (1998)
Working Paper: Education and Borrowing Constraints: Tests Vs. Prices (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:nbr:nberwo:6588

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6588
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc
Address: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Contact information at EDIRC.
Series data maintained by ().