This paper analyses political forces that cause an initial expansion of public spending on higher education and an ensuing decline in subsidies. Growing public expenditures increase the future size of the higher income class and thus boost future demand for education. This demand shift implies...

We model a higher education system that admits students according to their admission signal (e.g., matriculation GPA, SAT), which is, in turn, affected by their cognitive ability and socioeconomic background. We show that subsidizing education loans increases neither human capital stock nor...

When workers are myopic and the amount of financing provided by the government is sufficiently large, some workers acquire education even if they are better off without it. We show that government-provided loans generate a propagation mechanism that exacerbates inefficient college entry....

Higher education is subsidized worldwide, although with pronounced differences in levels of subsidization. While public funds account for about 90% of universities' budgets in Scandinavian countries, the share of public funds in Great Britain and the US is less that 30%. Subsidization is...

The proposal involves the establishment of 'welfare accounts' for every person in a country. There are to be four accounts: a retirement account (covering pensions), an unemployment account (covering unemployment support), a human capital account (covering education and training), and a health...

We provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a...

Der vorliegende Artikel unterzieht das Argument der externen Effekte im Bildungsbereich einer kritischen Prüfung und zeigt mögliche Konsequenzen für die Rechtfertigung öffentlicher Bildungsfinanzierung auf. Hierzu erfolgt zunächst eine differenzierte Betrachtung des Gutes Bildung. Daran...

We provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a...