Should Higher Education Subsidies Depend on Parental Income? Export

@article{citeulike:4209219, abstract = {In many countries, student grants, tuition fees, and subsidized loans depend on parental income. This paper examines the efficiency and distributional effects of such conditioning, and assesses whether it is optimal practice when the government wants to reduce after-tax income inequality in the most efficient manner. Increasing the mean level of education among the work-force compresses wage differentials by level of education and thereby the pre-tax income distribution. Hence, subsidizing education may be part of an optimal redistribution policy. However, education subsidies mainly benefit high-ability students, limiting their redistributive virtues. Conditioning education subsidies on parental income may enable the government to reduce inframarginal subsidies, mainly benefiting high-ability students, while preserving the marginal subsidy, and thus the favourable effect on the mean education level which leads to wage compression. 10.1093/oxrep/grh016}, author = {Dur, Robert and Teulings, Coen and van Rens, Thijs}, citeulike-article-id = {4209219}, citeulike-linkout-0 = {http://dx.doi.org/10.1093/oxrep/grh016}, citeulike-linkout-1 = {http://oxrep.oxfordjournals.org/cgi/content/abstract/20/2/284}, day = {1}, doi = {10.1093/oxrep/grh016}, journal = {Oxf Rev Econ Policy}, keywords = {morrisson, nelson, ses, student}, month = {June}, number = {2}, pages = {284--297}, posted-at = {2009-03-23 11:53:46}, priority = {2}, title = {Should Higher Education Subsidies Depend on Parental Income?}, url = {http://dx.doi.org/10.1093/oxrep/grh016}, volume = {20}, year = {2004} }

TY - JOUR ID - citeulike:4209219 L3 - citeulike-article-id:4209219 N2 - In many countries, student grants, tuition fees, and subsidized loans depend on parental income. This paper examines the efficiency and distributional effects of such conditioning, and assesses whether it is optimal practice when the government wants to reduce after-tax income inequality in the most efficient manner. Increasing the mean level of education among the work-force compresses wage differentials by level of education and thereby the pre-tax income distribution. Hence, subsidizing education may be part of an optimal redistribution policy. However, education subsidies mainly benefit high-ability students, limiting their redistributive virtues. Conditioning education subsidies on parental income may enable the government to reduce inframarginal subsidies, mainly benefiting high-ability students, while preserving the marginal subsidy, and thus the favourable effect on the mean education level which leads to wage compression. 10.1093/oxrep/grh016 IS - 2 JF - Oxf Rev Econ Policy EP - 297 TI - Should Higher Education Subsidies Depend on Parental Income? VL - 20 SP - 284 KW - morrisson KW - nelson KW - ses KW - student AU - Dur, Robert AU - Teulings, Coen AU - van Rens, Thijs PY - 2004/06/01/ UR - http://dx.doi.org/10.1093/oxrep/grh016 ER -