Are Public Subsidies to Higher Education Regressive?

Nearly-efficient tuitions and subsidies in American public higher education

A two-stage setting for determining subsidies and tuitions in a public university context is developed where fixed costs introduce an efficiency-enhancing role for taxpayer-financed appropriations. The optimal subsidy per enrollment is shown to be proportional to students’ maximum net willingness to pay. This result extends a well-known result associated with Ramsey pricing to include endogenou...

Salvatore Barbaro The Distributional Impact of Subsidies to Higher Education –

Equity vs. Effi ciency in Subsidies to Higher Education

Despite some empirical evidence to the contrary, government subsidies to higher education are usually presumed to be inequitable because college-educated workers earn more than less educated workers. Using a simple model of educational choice with endogenous wages and two worker types, I obtain strong results concerning this conflict between effi ciency and equity —namely that equity and effi c...

Redistribution and Education Subsidies are Siamese Twins

We develop a model of human capital formation with endogenous labor supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal schedule of the labor income tax. If the government can observe inputs into the production of human capital, subsidies on education ensure efficiency in human capital accumulation and labor taxes are more progressive than ...

The Incentive Effects of Higher Education Subsidies on Student Effort

This paper uses a game-theoretic model to analyze the disincentive effects of low-tuition policies on student effort. The model of parent and student responses to tuition subsidies is then calibrated using information from the National Longitudinal Survey of Youth 1979 and the High School and Beyond Sophomore Cohort: 1980-92. I find that although subsidizing tuition increases enrollment rates, ...