Tuition Fees, as User Prices, and Private Incentives
CESifo, Munich, 2016
CESifo Working Paper No. 5991
This paper studies the aggregate and distributional implications of introducing tuition fees for public education services into a tax system with income and consumption taxes. The setup is a neoclassical growth model where agents differ in capital holdings. We show that the introduction of tuition fees (a) improves individual incentives to work and/or save and (b) can be both efficient and equitable. The focus is on the role of tuition fees as an extra price and how this affects private incentives.
Public Finance
Fiscal Policy, Macroeconomics and Growth