Education and Borrowing Constraints: Tests Vs. Prices

Raquel Fernandez

No 1913, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 analysed 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.

Keywords: Borrowing Constraints; Education; exams; Markets (search for similar items in EconPapers)
JEL-codes: D52 E44 J41 (search for similar items in EconPapers)
Date: 1998-07
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1913 (application/pdf)
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

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: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1913

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1913

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().