We apply theories of capital market failure to ana1yzeoptima1 financing of risky higher education. In the market … solution,students can only finance their education through debt. There isunderinvestment in human capita1, because some … equityfinancing of education coupled to provision of some income insuranceis the optimal way to finance education when private markets …

optimal education subsidies. Optimal subsidies on education ensure efficiency in human capital accumulation and thus play an … verify all investments in human capital, education policy offsets some but not all tax-induced distortions on learning. Non …-pecuniary educational costs (benefits) may increase (decrease) subsidies on education, especially if they are complementary to work effort. …

This paper studies how linear tax and education policy should optimally respond to skill-biased technical change (SBTC … effects due to wage-(de)compression, and iii) education distortions. Analytically, the effect of SBTC on these three … distributional losses, and it increases education distortions. Also, SBTC lowers optimal education subsidies, since SBTC generates …

We apply theories of capital market failure to ana1yzeoptima1 financing of risky higher education. In the market … solution,students can only finance their education through debt. There isunderinvestment in human capita1, because some … equityfinancing of education coupled to provision of some income insuranceis the optimal way to finance education when private markets …

Should a redistributive government optimally subsidize education to provoke a reduction in the skill premium through … income taxes and education subsidies in two-type models with endogenous human capital formation, endogenous labor supply, and … endogenous wage rates. Under optimal linear policies, education should not be subsidized so as to reduce the skill premium …

. If education is complementary to labor effort, education should be subsidized to offset tax distortions on labor supply …. However, if most of the education is enjoyed by high ability households, education should be taxed in order to redistribute … resources to the poor. The paper identifies the exact conditions under which these two effects cancel and education should be …

linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against … incentives to work and to invest in human capital. Education subsidies are not used for social insurance, but are only targeted … at off-setting the distortions of the labor tax and internalizing a fiscal externality. Both optimal education subsidies …