Income redistribution from public higher education finance within relevant age cohorts

Abstract

Most state and local government programs can be viewed as a series of transfers of purchasing power among individuals and classes, and much attention has been given during the last decade to the income redistributional impact of state higher education provision. A particularly controversial study by Hansen and Weisbrod concluded that California's system of public higher education tended to redistribute income from lower to higher income families in the 1960s. Subsequent studies have criticized the Hansen-Weisbrod approach for, among other things, ignoring the intergenerational nature of the benefit transfer resulting from state subsidies to higher education. This study demonstrates for the state of New York that, although the intergenerational criticism is a valid one, most previous studies have not properly eliminated the distortions. The study finds considerable income redistribution toward lower income classes within the college-age age cohort resulting from New York State's financing of higher education.