Risk, Resources, and Education—Public Versus Private Financing of Higher Education
IMF Working Papers, December 1, 1999
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- Risk, Resources, and Education—Public Versus Private Financing of Higher Education
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Bibliographic details
- Published: December 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858679.001
Summary findings
- The paper develops a public education scheme that explicitly accounts for uncertainty in private educational investments.
- Social merits of public education schemes are linked to the absence of markets in which students can insure against educational risks.
- The author argues for tuition fees that depend on the expected returns of investments in education.
- Considering uncertainty creates a link between educational choice, resource endowment, and productivity growth that may redefine the public role of education financing.
Analytical framework and mechanisms
- Explicit modeling of uncertainty in private educational investments.
- Emphasis on market failures (lack of insurance markets for students) as a rationale for public intervention.
- Policy instrument proposed: tuition fees tied to expected returns to education, aligning private incentives with social considerations.
Policy implications and recommendations
- Design public education schemes that mitigate educational investment risk where private insurance markets are missing.
- Implement tuition-fee structures that reflect expected returns to educational investments to better allocate resources and influence educational choices.
- Recognize the role of uncertainty in shaping the relationship among educational choice, resource endowment, and productivity growth when defining public financing roles.
Content in this bundle
- Risk, Resources, and Education-Public Versus Private Financing of Higher Education - WP/99/174