ERIC Number: EJ1053871
Record Type: Journal
Publication Date: 2012-Sep
Pages: 32
Abstractor: As Provided
ISBN: N/A
ISSN: ISSN-1941-1391
EISSN: N/A
Credit Constraints in Education
Lochner, Lance; Monge-Naranjo, Alexander
Annual Review of Economics, v4 p225-256 Sep 2012
We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints have recently become important for schooling and other aspects of households' behavior. We highlight the importance of early childhood investments, as 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 and 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.
Descriptors: Human Capital, Credit (Finance), Economic Impact, Evidence, Early Childhood Education, Intergenerational Programs, Macroeconomics, Social Mobility, Income, Student Loan Programs, Incentive Grants, Debt (Financial), Loan Default, Access to Education, Public Policy
Annual Reviews. PO Box 10139, Palo Alto, CA 94303. e-mail: service@annualreviews.org; Web site: http://www.annualreviews.org/journal/economics
Publication Type: Journal Articles; Information Analyses; Reports - Evaluative
Education Level: Early Childhood Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Grant or Contract Numbers: N/A