Educational aid policy and inequality

The case for merit- and need-based aid

Bibliographic Data

ID9256053
AuthorsAboozar Hadavand (0000-0002-2887-9091, ,, corresponding author)
Year2018
Volume76
Issue4
Pages535-562
Publication date2018-10-02
Open AccessNo
TypeARTICLE
VenueReview of Social Economy (JOURNAL)
Journal identifiersISSN: 0034-6764 • E-ISSN: 1470-1162
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00346764.2018.1525760
OpenAlexW2775078914
LanguageEN
Citations received2
References cited28

Using model in which the assignment of skills to tasks is determined by relative productivities and are endogenously determined by ability, access to higher education, and technology, I find the effect of different educational aid schemes (including need-based aid, merit-based aid, or a combination of the two) on the distribution of wages. I calibrate the model using NLSY97 data and find that in general, determining what policy minimizes inequality depends on the elasticities of demand for higher education of each ability/human capital group, the labor shares of each group, and the share of resources devoted to each group. Given the model parameters, both merit-based and need-based policies are preferred to a policy based on both merit and need. Moreover, under the model parameters, a need-based policy reduces wage inequality more than a merit-based policy

Econometrics · Economic growth · Economics · Human capital · Inequality · Inequity aversion · Labour economics · Microeconomics · Public economics · Wage · Fiscal Policy and Economic Growth · Labor market dynamics and wage inequality · Mathematics · Poverty, Education, and Child Welfare

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