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Oxford Economic Papers 2000; 52:702-722
Copyright © 2000 Oxford Universty Press

Article

Efficiency and equity effects of subsidies to higher education

C García-Peñalosaz and K Wäldey

z GREQAM, Centre de la Vieille Charité, 2 rue de la Charité, Marseille 13002, France
y Department of Economics, University of Dresden, 01062 Dresden, Germany
E-mail: klaus@waelde.com

Abstract

We compare the efficiency and equity effects of three financing systems for higher education: the traditional tax-subsidy system, where education subsidies are financed from general taxation; loan schemes; and a graduate tax. We find that efficiency and equity targets cannot be simultaneously achieved by the traditional tax-subsidy system, and that both loan schemes and a graduate tax fare better. When education outcomes are uncertain, the graduate tax is to be preferred to a pure loan scheme because of the greater insurance provided by the former and because it tends to be preferable to an income contingent loan system.


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Home page
 CESifo Economic StudiesHome page
G. Demange, R. Fenge, and S. Uebelmesser
The Provision of Higher Education in a Global World--Analysis and Policy Implications
CESifo Economic Studies, June 1, 2008; 54(2): 248 - 276.
[Abstract] [Full Text] [PDF]


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