College education and income contingent loans in equilibrium

• 成果类型: Article
• 署名作者: Matsuda, Kazushige; Mazur, Karol
• 署名单位: Kobe University; Peking University; Peking University Shenzhen Graduate School (PKU Shenzhen)
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2022.08.005
• 发表日期: 2022
• 页码: 100-117
• 关键词: Human capital; Endogenous skill premium; Income driven repayments

摘要

In 2009 the US government introduced a major income-contingent loans (ICLs) program for financing higher education. We investigate its welfare implications in the presence of income shocks, and endogenous dropout risk and college enrollment. While ICLs pro-vide valuable income insurance and thereby increase college enrollment by risk averse agents, they may also lead to adverse selection of individuals with lower ability and gen-erate a moral hazard cost of lowering educational effort and labor hours. We evaluate this insurance-incentives trade-off in a calibrated heterogeneous agent model. We show that ICLs increase welfare and that the social costs of adverse selection and moral hazard are mild.(c) 2022 Elsevier B.V. All rights reserved.