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Funding Higher Education and Wage Uncertainty: Income Contingent Loan versus Mortgage Loan

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Funding Higher Education and Wage Uncertainty: Income Contingent Loan versus Mortgage Loan. / Migali, Giuseppe.

In: Economics of Education Review, Vol. 31, No. 6, 12.2012, p. 871-889.

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Migali, Giuseppe. / Funding Higher Education and Wage Uncertainty: Income Contingent Loan versus Mortgage Loan. In: Economics of Education Review. 2012 ; Vol. 31, No. 6. pp. 871-889.

Bibtex

@article{11b4f4b8210749208d258c39a667ce07,
title = "Funding Higher Education and Wage Uncertainty: Income Contingent Loan versus Mortgage Loan",
abstract = "We propose a simple theoretical model which shows how the combined effect of wage uncertainty and risk aversion can modify the individual willingness to pay for a HE system financed by an ICL or a ML. We calibrate our model using real data from the 1970 British Cohort Survey together with the features of the English HE financing system. We allow for individual heterogeneity by considering different family backgrounds and occupations. We find that graduates from poor families, males and graduates working in the private sector are more willing to pay to switch to an ICL. Using the UK Labour Force Survey we evaluate the distributive effects of our model. We compute the repayment burdens and taxpayer subsidies for average, low and high earnings graduates. The results confirm the important insurance benefits of an ICL compared to a ML, with lower burdens and higher subsidies for poorer graduates.",
keywords = "Education choice, Risk aversion, Uncertainty",
author = "Giuseppe Migali",
year = "2012",
month = "12",
doi = "10.1016/j.econedurev.2012.06.001",
language = "English",
volume = "31",
pages = "871--889",
journal = "Economics of Education Review",
issn = "0272-7757",
publisher = "Elsevier Limited",
number = "6",

}

RIS

TY - JOUR

T1 - Funding Higher Education and Wage Uncertainty: Income Contingent Loan versus Mortgage Loan

AU - Migali, Giuseppe

PY - 2012/12

Y1 - 2012/12

N2 - We propose a simple theoretical model which shows how the combined effect of wage uncertainty and risk aversion can modify the individual willingness to pay for a HE system financed by an ICL or a ML. We calibrate our model using real data from the 1970 British Cohort Survey together with the features of the English HE financing system. We allow for individual heterogeneity by considering different family backgrounds and occupations. We find that graduates from poor families, males and graduates working in the private sector are more willing to pay to switch to an ICL. Using the UK Labour Force Survey we evaluate the distributive effects of our model. We compute the repayment burdens and taxpayer subsidies for average, low and high earnings graduates. The results confirm the important insurance benefits of an ICL compared to a ML, with lower burdens and higher subsidies for poorer graduates.

AB - We propose a simple theoretical model which shows how the combined effect of wage uncertainty and risk aversion can modify the individual willingness to pay for a HE system financed by an ICL or a ML. We calibrate our model using real data from the 1970 British Cohort Survey together with the features of the English HE financing system. We allow for individual heterogeneity by considering different family backgrounds and occupations. We find that graduates from poor families, males and graduates working in the private sector are more willing to pay to switch to an ICL. Using the UK Labour Force Survey we evaluate the distributive effects of our model. We compute the repayment burdens and taxpayer subsidies for average, low and high earnings graduates. The results confirm the important insurance benefits of an ICL compared to a ML, with lower burdens and higher subsidies for poorer graduates.

KW - Education choice

KW - Risk aversion

KW - Uncertainty

U2 - 10.1016/j.econedurev.2012.06.001

DO - 10.1016/j.econedurev.2012.06.001

M3 - Journal article

VL - 31

SP - 871

EP - 889

JO - Economics of Education Review

JF - Economics of Education Review

SN - 0272-7757

IS - 6

ER -