Optimal student loans and graduate tax under moral hazard and adverse selection
| Autor: | Alain Trannoy, Robert J. Gary-Bobo |
|---|---|
| Přispěvatelé: | Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne (UP1 UFR02), Université Paris 1 Panthéon-Sorbonne (UP1), Ensae-Crest, École des hautes études en sciences sociales (EHESS), Groupement de Recherche en Économie Quantitative d'Aix-Marseille (GREQAM), École Centrale de Marseille (ECM)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)-Aix Marseille Université (AMU), Centre de Recherche en Économie et Statistique (CREST), Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] (ENSAI)-École polytechnique (X)-École Nationale de la Statistique et de l'Administration Économique (ENSAE Paris)-Centre National de la Recherche Scientifique (CNRS), École des hautes études en sciences sociales (EHESS)-Aix Marseille Université (AMU)-École Centrale de Marseille (ECM)-Centre National de la Recherche Scientifique (CNRS) |
| Rok vydání: | 2015 |
| Předmět: |
Economics and Econometrics
adverse selection Moral hazard jel:D60 jel:D82 student loans graduate tax optimal income tax adverse selection moral hazard risk Adverse selection asymmetric information higher education mechanism design optimal taxation student loans jel:I22 [SHS]Humanities and Social Sciences jel:H21 jel:I24 Income tax 0502 economics and business Economics 050207 economics Set (psychology) Economie quantitative ComputingMilieux_MISCELLANEOUS Graduate tax 050208 finance Actuarial science Earnings Risk aversion 05 social sciences student loans graduate tax adverse selection moral hazard risk aversion 1. No poverty risk aversion [SHS.ECO]Humanities and Social Sciences/Economics and Finance moral hazard Loan graduate tax 8. Economic growth |
| Zdroj: | RAND Journal of Economics RAND Journal of Economics, Wiley, 2015 RAND Journal of Economics, Wiley, 2015, 46 (3), pp.546--576. ⟨10.1111/1756-2171.12097⟩ RAND Journal of Economics, 2015, 46 (3), pp.546--576. ⟨10.1111/1756-2171.12097⟩ |
| ISSN: | 0741-6261 |
| Popis: | We completely characterize the set of second-best optimal "menus" of student-loan contracts in a simple economy with risky labour-market outcomes, adverse selection, moral hazard and risk aversion. The model combines structured student loans and an elementary optimal income-tax problem à la Mirrlees. This combination can be called a graduate tax. There are two categories of second-best optima: the equal treatment and the separating allocations. The equal treatment case is obtained when the social weights of student types are close to their population frequencies; the expected utilities of different types are then equalized, conditional on the event of success on the labor market. But individuals are ex ante unequal because of differing probabilities of success, and ex post unequal, because the income tax trades off incentives and insurance (redistribution). In separating optima, the talented types bear more risk than the less-talented ones; they arise only if the social weight of the talented types is sufficiently high. The second-best optimal graduate tax provides incomplete insurance because of moral hazard; it typically involves cross-subsidies; generically, it cannot be decomposed as the sum of an optimal income tax depending only on earnings, and a loan repayment, depending only on education. Therefore, optimal loan repayments must be income-contingent. |
| Databáze: | OpenAIRE |
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