Study-Grant Schemes and Effort: An Economic Model

Tikva Darvish-Lecker and Nava Kahana

Bulletin of Economic Research, 1990, vol. 42, issue 3, 229-39

Abstract: This paper extends Becker's basic model on investment in human capital by introducing effort as a decision variable. Based on this extended model we consider the efficiency of two popular study-grant schemes and propose a third which unequivocally increases the student's effort and may thereby resolve the moral hazard problem created by the student's self-interested behavior. In addition, some policy issues concerning conflicts bewteen the students' and the policy-maker's objectives are discussed. Copyright 1990 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Date: 1990
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