We consider an OLG economy with endogenous investment in human capital. Heterogeneity in individual human capital levels is generated by random innate ability. The production of human capital depends on each individual's investment in education. This investment decision is taken only after...

In higher education, pure credit market funding leads to underinvestment due to insufficient risk pooling, while pure income-contingent loan funding leads to overinvestment. We analyze whether funding diversity – a market structure in which credit markets coexist alongside income-contingent...

The paper studies the effect of tax asymmetry on (risk neutral) competitive firm's production and optimal hedging behavior under price uncertainty. Assuming that the tax rate on profits is higher than the compensation rate for losses, we show that: (a) in the absence of risk sharing arrangements...