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Essays on the Economics of Education
Todua, Gega ; Jeong, Byeongju (advisor) ; Patrinos, Harry Anthony (referee) ; Veramendi, Gregory (referee)
In the first chapter, we study financial aid policies in developing countries that sup- port students' education abroad. We collect a unique data-set on government-funded scholarship and loan programs and establish stylized facts for developing countries. We find that scholarship programs select students based on merit criteria, target grad- uate and postgraduate studies, and require recipients to return after graduation more frequently than loan programs do. We build a two-country student migration model that qualitatively accounts for the observed patterns. In the model, government inter- vention is justified for two reasons. First, students from a developing country are as- sumed to be financially constrained and cannot afford education abroad. Second, the government values the productivity of "returnees" more highly than the market does. We argue that when students are uncertain about their future productivity and may fail in their studies, scholarship programs can insure them against potential default. Consequently, if students differ in their expected ability, under certain conditions, a government with a tight budget will prioritize ex-ante high-ability students and sup- port them with scholarships with return requirement, and support ex-ante low-ability students with loans without return...
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