@techreport{Schindler2007Educa-12212,
  year={2007},
  series={Diskussionspapiere der DFG-Forschergruppe Heterogene Arbeit},
  title={Educational risk and public policy : taxation, fees, loans, and incentives},
  number={07/09},
  author={Schindler, Dirk and Weigert, Benjamin}
}

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    <dcterms:abstract xml:lang="eng">We develop a model of education where individuals face educational risk. Successful graduation depends on individual effort to study and public resources. After realization of risk, they either work as skilled or as unskilled worker. We show that an optimal public policy consists of tuition fees combined with income-contingent loans, lump-sum transfers/taxes, and public funding of the educational sector. Contrary to standard models in case of income risk, it is not optimal to use a proportional wage tax, because income-contingent loans and public education spending provide simultaneously insurance and redistribution at lower costs. A wage tax is only optimal, if tuition fees are not available.</dcterms:abstract>
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