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Do income contingent student loans reduce labor supply?
© 2020 The Author Government-backed income contingent student loans are increasingly being used to fund higher education. Until the outstanding balance is cleared, an income contingent repayment plan acts as an incremental marginal tax on earnings above a threshold. If this additional "tax" on earnings reduces the labor supply and hence the earnings of borrowers, this could reduce both loan repayments and tax receipts, increasing the cost of funding higher education. This paper investigates this under-studied topic by exploring bunching at various loan repayment thresholds between 2002 and 2014, using a novel, linked administrative dataset from the United Kingdom. Our findings suggest that the UK's income contingent repayment plan does not cause borrowers to reduce labor supply, at least for those with earnings near to the threshold.
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Do income contingent student loans reduce labor supply?
In: Economics of education review, Volume 79, p. 102061
ISSN: 0272-7757
Health and Employment Amongst Older Workers
In: CEPR Discussion Paper No. DP14422
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Working paper
Do Income Contingent Student Loan Programs Distort Earnings? Evidence from the UK
In: NBER Working Paper No. w25822
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Estimating the cost to government of providing undergraduate and postgraduate education
The uncertainty over future student loan repayments means that the debate about whether the government contribution to the cost of higher education is too high will almost certainly continue. However, as our analysis makes clear, whatever the current estimate of the RAB charge, it is based on a large number of assumptions, many of which are likely to change in future (e.g. the rate of graduate earnings growth). It also depends hugely on the way in which we value expected future repayments in the present. It would thus be a mistake to undertake reforms solely on the basis of a single uncertain figure. The loan subsidy is just one part of a package of support that the government offers to students and universities which must be taken into consideration when deciding on the extent to which it wishes to subsidise higher education in England.
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Teacher pay and school productivity:Exploiting wage regulation
In: Britton , J W & Propper , C 2016 , ' Teacher pay and school productivity : Exploiting wage regulation ' , Journal of Public Economics , vol. 133 , pp. 75-89 . https://doi.org/10.1016/j.jpubeco.2015.12.004
The impact of teacher pay on school productivity is a central concern for governments worldwide, yet evidence is mixed. In this paper we exploit a feature of teacher labour markets to determine the impact of teacher wages. Teacher wages are commonly set in a manner that results in flat wages across heterogeneous labour markets. This creates an exogenous gap between the outside labour market and inside (regulated) wage for teachers. We use the centralised wage regulation of teachers in England to examine the effect of pay on school performance. We use data on over 3000 schools containing around 200,000 teachers who educate around half a million children per year. We find that teachers respond to pay. A ten percent shock to the wage gap between local labour market and teacher wages results in an average loss of around 2% in average school performance in the key exams taken at the end of compulsory schooling in England.
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Comparing sample survey measures of English earnings of graduates with administrative data during the Great Recession
This paper compares survey based labour earnings data for English graduates, taken from the UK's Labour Force Survey (LFS), with the UK Government administrative sources of official individual level earnings data. This type of administrative data has few sample selection issues, is substantially longitudinal and its large samples mean the earnings of subpopulations can be potentially studied (e.g. those who study a specific subject at a specific university and graduate in a speci?c year). We find that very broadly the LFS and administrative data show a similar distribution of graduates' earnings. However, the administrative data has considerably less gender disparity, higher high quantiles and more time series persistence. We also report on how the distribution of graduate and non-graduate earnings fell during each year of the Great Recession.
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Income contingent student loan design: Lessons from around the world
In: Economics of education review, Volume 71, p. 65-82
ISSN: 0272-7757
The Impact of Health on Labor Supply near Retirement
In: The journal of human resources, Volume 58, Issue 1, p. 282-334
ISSN: 1548-8004
Econometrics of valuing income contingent student loans using administrative data: Groups of English students
Income contingent loans are an increasingly popular tool for funding higher education. These loans have desirable features, but also potentially high overall government write-offs in the long run. This latter fact has been well documented, but little is known about how those write-offs vary by subgroups of borrowers. It is important to quantify this and also to understand how it is affected by the design of the higher education system. Estimation is challenging because it requires the projection of earnings of graduates many years into the future. In this paper, we use English Student Loan Company records with information on borrowing, course, and institution linked to offcial tax records that give earnings for up to 11 years after graduation. Our innovative econometric methods fuse administrative tax records of graduates since they left university with graduate survey data to allow us to extrapolate through the life cycle for the remainder of the loan contract. Our methodology is potentially applicable in a wide range of settings that uses incomplete administrative data. We estimate government subsidies through unpaid loans in England at the subject and institution level for the first time, finding considerable heterogeneity in both. England is an interesting case study due to the significant reforms to higher education over the past twenty years. We show that these reforms have had strong implications for the distribution of government spending on higher education.
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Working paper