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The Economics of Screening and Risk Sharing in Higher Education - 1st Edition - ISBN: 9780128031902, 9780128031919

The Economics of Screening and Risk Sharing in Higher Education

1st Edition

Human Capital Formation, Income Inequality, and Welfare

Authors: Bernhard Eckwert Itzhak Zilcha
Paperback ISBN: 9780128031902
eBook ISBN: 9780128031919
Imprint: Academic Press
Published Date: 21st April 2015
Page Count: 190
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The Economics of Screening and Risk Sharing in Higher Education explores advances in information technologies and in statistical and social sciences that have significantly improved the reliability of techniques for screening large populations. These advances are important for higher education worldwide because they affect many of the mechanisms commonly used for rationing the available supply of educational services. Using a single framework to study several independent questions, the authors provide a comprehensive theory in an empirically-driven field. Their answers to questions about funding structures for investments in higher education, students’ attitudes towards risk, and the availability of arrangements for sharing individual talent risks are important for understanding the theoretical underpinnings of information and uncertainty on human capital formation.

Key Features

  • Investigates conditions under which better screening leads to desirable outcomes such as higher human capital accumulation, less income inequality, and higher economic well-being.
  • Questions how the role of screening relates to the funding structure for investments in higher education and to the availability of risk sharing arrangements for individual talent risks.
  • Reveals government policies that are suited for controlling or counteracting detrimental side effects along the growth path.


Graduate students and researchers working in human capital, inequality, and economic growth, and more generally in macroeconomics, public economics, and labor economics.

Table of Contents

  • Preface
  • Chapter 1: Uncertainty and Screening: Preliminary Notions
    • Abstract
    • 1.1 Information System
    • 1.2 Real State and Signal Spaces
    • 1.3 Informativeness Orderings
    • Appendix to Chapter1
  • Chapter 2: Screening Information in Equilibrium
    • Abstract
    • 2.1 Value of Information in Exchange Economies
    • 2.2 Value of Information in Production Economies
    • Appendix to Chapter 2
  • Chapter 3: Evidence on Higher Education and Economic Performance
    • Abstract
    • 3.1 Higher Education and Economic Development
    • 3.2 Higher Education and Income Inequality
    • 3.3 Income Inequality and Growth
    • 3.4 Credit Constraints in Higher Education
  • Chapter 4: Screening and Economic Growth
    • Abstract
    • 4.1 Better Screening in a Dynamic Framework
    • 4.2 Description of the Framework
    • 4.3 Screening in the Absence of Risk Sharing
    • 4.4 Screening in the Presence of Risk Sharing
    • 4.5 Concluding Remarks
    • Appendix to Chapter 4
  • Chapter 5: Higher Education Financing
    • Abstract
    • 5.1 Basic Framework with Multiple Funding Schemes
    • 5.2 Human Capital Accumulation
    • 5.3 Welfare Comparison
    • 5.4 The Effect of Better Screening
    • Appendix to Chapter 5
  • Chapter 6: The Role of Government in Financing Higher Education
    • Abstract
    • 6.1 Subsidizing Tuition Versus Subsidizing Student Loans
    • 6.2 Should Diverse Funding Schemes Coexist in Higher Education?
    • Appendix to Chapter 6
  • Chapter 7: Screening and Income Inequality
    • Abstract
    • 7.1 Inequality of Income Opportunities
    • 7.2 Inequality of Income Distribution
    • Appendix to Chapter 7
  • Bibliography
  • Index


No. of pages:
© Academic Press 2015
21st April 2015
Academic Press
Paperback ISBN:
eBook ISBN:

About the Authors

Bernhard Eckwert

Prof. Dr. Bernhard Eckwert is chair of the Economics Department at Bielefeld University. He has published on the theory of capital markets, the economics of information, and endogenous growth in journals such as European Economic Review, Economica, and the Journal of Economic Dynamics and Control

Affiliations and Expertise

Bielefeld University, Bielefeld, Germany

Itzhak Zilcha

Itzhak Zilcha works on problems in human capital, growth, and income distribution; the economics of information; and the economics of insurance. He has published his research in the Journal of Economic Dynamics and Control, Economica, and the Journal of Public Economic Theory, among others.

Affiliations and Expertise

The Eitan Berglas School of Economics, Tel Aviv University, Israel


"...the relevance of the book’s theme and the clear presentation makes this work a highly valuable reading for all scholars of the economics of education." --Journal of Economics

"Recent economic conditions and predictions have increased interest in the analysis of higher education finance, provision, and allocation. This timely book presents a rigorous theoretical analysis tackling two key issues, and is a valuable resource for both experienced and aspiring researchers."  –Sinan Sarpça, Koç University

"This book offers a unique comprehensive analysis of the use of screening techniques for admission to higher education. It develops rigorous theoretical insights to address a highly relevant issue in policy which carries huge potential implications for human capital accumulation, the allocation of talents, and income inequality."  – Graziella Bertocchi, Università di Modena e Reggio Emilia

"This is a beautiful work, a pleasure to read. With MOOCs, reduced government support, and worsening income distribution, concern about how students are sorted among institutions of higher education is rising. To address the effect of universities' ability to process more information about students, Eckwert and Zilcha devise a general equilibrium sorting model , more technically sophisticated than the usual partial equilibrium approach but also more relevant for policy.  There are analogies between what they do for higher education and what others have done to model health insurance, where welfare can also be reduced by improved information."  – David Denslow, University of Florida

"Reading this book will be a pleasure for everyone who is interested in education and in the same time familiar with the economics of information and general equilibrium theory. The models are designed parsimoniously, but rich enough to make the point, and the exposition is perfectly rigorous and clear. In most cases, the authors also give a crisp intuition for the effects driving the results…the book contains important lessons for empirical research and policy. Its findings actually underline the value of general equilibrium theory for education economics by pointing out trade-offs and market repercussions which are seldom appreciated…the relevance of the book’s theme and the clear presentation makes this work a highly valuable reading for all scholars of the economics of education." – The Journal of Economics

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