Credit Constraints in Education / Lance Lochner, Alexander Monge-Naranjo.

Format:

Book

Author/Creator:

Lochner, Lance.

Contributor:

National Bureau of Economic Research.

Monge-Naranjo, Alexander.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17435.

NBER working paper series no. w17435

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints are increasingly important for schooling and other aspects of households' behavior. We highlight the importance of early childhood investments, since their response largely determines the impact of credit constraints on the overall lifetime acquisition of human capital. We also review the intergenerational literature and examine the macroeconomic impacts of credit constraints on social mobility and the income distribution.

A common limitation across all areas of the human capital literature is the imposition of ad hoc constraints on credit. We propose a more careful treatment of the structure of government student loan programs as well as the incentive problems underlying private credit. We show that endogenizing constraints on credit for human capital helps explain observed borrowing, schooling, and default patterns and offers new insights about the design of government policy.

Notes:

Print version record

September 2011.