Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34859
Authors: 
Kaas, Leo
Zink, Stefan
Year of Publication: 
2008
Series/Report no.: 
IZA discussion papers 3722
Abstract: 
We study human capital accumulation in an environment of competitive search. Given that unemployed workers can default on their education loans, skilled individuals with a larger debt burden prefer riskier but better paid careers than is socially desirable. A higher level of employment risk in turn depresses the skill premium and the incentives to invest in education. The equilibrium allocation is characterized by too much unemployment, underinvestment by the poor, and too little investment in skill-intensive technologies. A public education system funded by graduate taxes can restore efficiency. More generally, differences in education funding can account for cross-country variations in wage inequality.
Subjects: 
Directed search
investment
education finance
JEL: 
I22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
310.13 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.