Conference Agenda

Despite a well documented signaling and status motive behind higher education, the implications thereof for optimal redistributive taxation remain largely unknown. This paper deals with education policy in a very general continuous type model of optimal redistributive taxation, in which individuals are concerned with their relative standing in both education and consumption. We show how concerns for relative education may reduce the optimal marginal eduction subsidies subsantially, as well as how these marginal subsidies relate to the marginal income tax structure. More specifically, we illustrate when optimal eduction subsidies contribute to decrease versus increase consumption inequality.

We follow high school graduates through college and the labor market to study income segregation and intergenerational mobility across colleges in Brazil, a unique context where admissions are mostly determined by exam scores and public institutions are free and of high quality. We show that public college admissions are income neutral once controlling for grades, but elite public colleges are composed mostly of higher-income students, as they have higher exam scores. Intergenerational mobility rates in elite public colleges are low, but higher than in comparable private institutions. We develop a general framework to evaluate affirmative action in public colleges and subsidized loans for private institutions. Both policies increased the mobility of low-income students, but subsidized loans have a larger effect. While AA increases the representation of disadvantaged students in elite schools and subsidized loans do not, the latter policy reallocates an overall larger number of students to better college tiers.

Educational and labor market outcomes are influenced not only by academic ability but also by a student’s relative rank among peers—a phenomenon known as the “big fish, little pond effect” (BFLPE). Using linked administrative data from British Columbia’s Elementary and Labour Market Longitudinal Panel (ELMLP), we track students from elementary school through adulthood to examine the effects of rank in grade 7 on long-term outcomes. We find that higher math rank significantly increases income relative to the median, with top-ranked students earning up to 5% more and lower-ranked students earning up to 7% less. In contrast, reading rank has no effect on income but influences educational attainment. These findings suggest that rank plays a key role in shaping success. Our results have implications for education policy, highlighting the need for targeted interventions to support lower-ranked students and the importance of fostering quantitative skills for long-term economic benefits.

In this paper, a multilevel analysis is applied to the OECD-PISA 2018 data for Greece with the aim to identify the multiple mechanisms that produce adverse child outcomes, at least as captured by poor school performance. At the student level, gender, immigration status, early-childhood education attendance and the cultural aspects of family socioeconomic status play an important role. At the school level, the private-public divide seems to be the strongest favoring private schools. Its direction is however reversed once school mean family socioeconomic background is taken into account, suggesting that the way students and schools are matched affects how family background effects are reproduced. Educational inequalities are further compounded in upper secondary education where differences in family investment in private education and tutoring are huge among children of unequal economic status. The paper provides important insights for policymakers in order for society to tackle inequalities and properly invest in its human capital potential.