McKenzie, Tom and Sliwka, Dirk ORCID: 0000-0002-8026-0165 (2011). Universities as Stakeholders in their Students' Careers: On the Benefits of Graduate Taxes to Finance Higher Education. J. Inst. Theor. Econ.-Z. Gesamte Staatswiss., 167 (4). S. 726 - 743. TUBINGEN: J C B MOHR. ISSN 1614-0559

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Abstract

We compare up-front tuition fees with graduate taxes for funding higher education. Graduate taxes transfer the volatility in future income from risk-averse students to the risk-neutral state. However, a double moral-hazard problem arises when graduates' work effort and universities' teaching quality are endogenized. Graduate taxes reduce work incentives, but induce universities to improve teaching quality. Yet if revenues are distributed evenly among universities, there is free riding. This is solved by allocating each university the tax revenue from its own alumni. We also demonstrate how a budget-balancing graduate tax would encourage higher university participation than the equivalent tuition fee. (JEL: H42, H52, I22, M52)

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
McKenzie, TomUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Sliwka, DirkUNSPECIFIEDorcid.org/0000-0002-8026-0165UNSPECIFIED
URN: urn:nbn:de:hbz:38-484045
DOI: 10.1628/jite-2011-0001
Journal or Publication Title: J. Inst. Theor. Econ.-Z. Gesamte Staatswiss.
Volume: 167
Number: 4
Page Range: S. 726 - 743
Date: 2011
Publisher: J C B MOHR
Place of Publication: TUBINGEN
ISSN: 1614-0559
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
DOUBLE MORAL HAZARD; SUBSIDIESMultiple languages
EconomicsMultiple languages
URI: http://kups.ub.uni-koeln.de/id/eprint/48404

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