Private Investment in Higher Education: Comparing Alternative Funding Schemes
Article first published online: 13 JAN 2011
© 2011 The London School of Economics and Political Science
Volume 79, Issue 313, pages 76–96, January 2012
How to Cite
ECKWERT, B. and ZILCHA, I. (2012), Private Investment in Higher Education: Comparing Alternative Funding Schemes. Economica, 79: 76–96. doi: 10.1111/j.1468-0335.2010.00871.x
- Issue published online: 13 DEC 2011
- Article first published online: 13 JAN 2011
- Final version received 10 May 2010.
This paper uses an overlapping generations framework to analyse the implications of different financing regimes in the education sector for human capital formation and economic welfare. Agents privately invest in education after they have received a noisy information signal about their abilities. The incentives of individuals to invest in education are determined by the financing regime under which the economy operates. We analyse and compare three financing regimes. Under each regime, the payback obligation of an educational loan is contingent, to some extent, on an individual's future income.