Political economics of higher education finance

Rainald Borck () and Martin Wimbersky ()
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Rainald Borck: University of Passau
Martin Wimbersky: University of Munich

No 2010/17, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: We study voting over higher education finance in an economy with risk averse households who are heterogeneous in income. We compare four different systems and analyse voters' choices among them: a traditional subsidy scheme, a pure loan scheme, income contingent loans and graduate taxes. Using numerical simulations, we find that majorities for income contingent loans or graduate taxes become more likely as the income distribution gets more equal. We also perform sensitivity analyses with respect to risk aversion and the elasticity of substitution between high skilled and low skilled workers.

Keywords: Voting; higher education; financing scheme (search for similar items in EconPapers)
JEL-codes: D72 H42 H52 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2010
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