On 28th November OxTalks will move to the new Halo platform and will become 'Oxford Events' (full details are available on the Staff Gateway).
There will be an OxTalks freeze beginning on Friday 14th November. This means you will need to publish any of your known events to OxTalks by then as there will be no facility to publish or edit events in that fortnight. During the freeze, all events will be migrated to the new Oxford Events site. It will still be possible to view events on OxTalks during this time.
If you have any questions, please contact halo@digital.ox.ac.uk
This paper investigates the welfare and efficiency implications of income-contingent loans (ICLs) used for financing risky college education. Using a simple two period human capital model, we show that the laissez-faire allocation is constrained inefficient due to incomplete markets and pecuniary externalities working through the skill premium. Furthermore, we show that although ICLs can restore the second best efficiency of the economy, the social planner may achieve the same outcomes using progressive income tax systems. Building on these insights, we construct an overlapping generations life-cycle economy with heterogenous agents and calibrate it to the US tax system, education and labor markets. We find that although the current design of ICLs induces some redistribution across wealth-ability groups, it does not increase overall utilitarian welfare. Decomposing the results, we show that the positive effects of ICLs are significantly attenuated by the existing progressive income tax system and general equilibrium effects.
