Optimal education policies under endogenous borrowing constraints

Wang, Min

doi:10.1007/s00199-013-0743-5

Cited by 13 publications

(9 citation statements)

References 16 publications

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“…7 There are also a number of papers that use general equilibrium models and address borrowing constraints and educational attainment. Some examples include Akyol and Athreya (2005), Gallipoli, Meghir, and Violante (2010), Garriga and Keightley (2007), Wang (2011), and Winter (2011). These models account for the changes in relative prices which occur as a result of large adjustments to the structure of higher education.…”

Section: Related Literaturementioning

confidence: 99%

Borrowing Constraints, College Enrollment, and Delayed Entry

Johnson

2013

Journal of Labor Economics

121

117

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In this paper I propose and estimate a dynamic model of education, borrowing, and work decisions of high school graduates. I examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government sponsored loan programs. My results indicate that borrowing constraints have a small impact on * I am grateful to my advisors Joe Altonji, Melissa Tartari, and Fabian Lange for their guidance. I thank Peter Arcidiacono, Bjoern Bruegemann, Lance Lochner, Doug McGee, Tony Smith, and Chris Taber for helpful discussions and suggestions. I would also like to thank seminar participants at the Bureau of Labor Statistics,

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Section: Related Literaturementioning

confidence: 99%

Borrowing Constraints, College Enrollment, and Delayed Entry

Johnson

2013

Journal of Labor Economics

121

117

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confidence: 99%

“… Wang () asks if the Boldrin‐Montes EP package replicates the complete market allocation in the presence of endogenous borrowing constraints. The effects, as Wang () points out, are not obvious. In such models, a generous EP package dims the desire for consumption smoothing between middle and old age.…”

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confidence: 99%

The Intergenerational Welfare State and The Rise and Fall of Pay‐As‐You‐Go Pensions

Andersen

Bhattacharya

2016

The Economic Journal

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This article develops a theory of the two‐armed intergenerational welfare state, consistent with key features of modern welfare arrangements, and uses it to rationalise the rise and fall in generosity of Pay‐as‐you‐go Pensions solely on efficiency grounds. By using the education arm, a dynamically‐efficient welfare state is shown to improve upon long‐run laissez faire even when market failures are absent. To release these downstream welfare gains without hurting any transitional generation, help from the pension arm is needed. In the presence of an intergenerational education externality, pensions initially rise in generosity but can be replaced by fully funded pensions eventually.

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“…This includes Zhang (1997), Mateos-Planas and Seccia (2006),Ábrahám and Cárceles-Poveda (2010), Andolfatto andGervais (2008), andWang (2011). This paper is also related to the recent quantitative literature on consumer credit and bankruptcy. The works that undertake a quantitative general equilibrium analysis of incomplete markets include Chatterjee, Corbae, Nakajima, and Ríos-Rull (2007), and Livshits, MacGee, and Tertilt (2007), Mateos-Planas (2013), Mateos-Planas and Ríos-Rull (2013), Mateos-Planas (2011), andAthreya, Tam, andYoung (2009).…”

Section: Avenuementioning

confidence: 98%

Consumer default with complete markets: default-based pricing and finite punishment

Mateos‐Planas

Seccia

2013

Econ Theory

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This paper studies economies with complete markets where there is positive default on consumer debt. In a simple tractable two-period model, households can default partially, at a finite punishment cost, and competitive intermediaries price loans of different sizes separately. This environment yields only partial insurance. The default-based pricing of debt makes it too costly for the borrower to achieve full insurance and there is too little trade in securities. This framework is in contrast with existing literature. Unlike the literature with default, there are no restrictions on the set of state contingent securities that are issued. Unlike the literature on lack of commitment, limited trade arises without need of debt constraints that rule default out. Compared with the latter, the present approach appears to imply more consumption inequality. An extended model with an infinite horizon, idiosyncratic risk and more realistic assumptions is used to demonstrate the general validity of this approach and its main implications.

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Optimal education policies under endogenous borrowing constraints

Cited by 13 publications

References 16 publications

Borrowing Constraints, College Enrollment, and Delayed Entry

Borrowing Constraints, College Enrollment, and Delayed Entry

The Intergenerational Welfare State and The Rise and Fall of Pay‐As‐You‐Go Pensions

Consumer default with complete markets: default-based pricing and finite punishment

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