Skip to main content

Income Contingent Loans for Social Policy: the Case of Paid Parental Leave

  • Chapter
  • 847 Accesses

Part of the International Economic Association Series book series (IEA)

Abstract

Income contingent loans (ICL) may provide an efficient and equitable option for extending taxpayer-funded paid parental leave (PPL) schemes, which may be otherwise limited in duration and payment amounts due to fiscal pressures. A lack of liquidity and market failure can prevent families from financing an extension of leave beyond that typically offered in most OECD countries through taxpayer-funded PPL. It is argued that an ICL could provide consumption smoothing and encourage participation, yet taxpayer costs could be kept low (if not zero) provided scheme design mitigates against adverse selection and moral hazard. An appropriately designed scheme could also be welfare enhancing to parents even in the absence of taxpayer subsidies.

Keywords

  • Moral Hazard
  • Real Interest Rate
  • Adverse Selection
  • Parental Leave
  • Contemporary Issue

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

This paper draws on Timothy Higgins (2014). The author wishes to acknowledge the critical input from Bruce Chapman and Joseph Stiglitz, and to acknowledge the financial input from Dhurakij Pundit University (Thailand), the Australia Research Council, and the Research School of Finance, Actuarial Studies and Statistics, Australian National University. All errors and omissions are the responsibility of the author.

This is a preview of subscription content, access via your institution.

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • DOI: 10.1057/9781137529718_10
  • Chapter length: 10 pages
  • Instant PDF download
  • Readable on all devices
  • Own it forever
  • Exclusive offer for individuals only
  • Tax calculation will be finalised during checkout
eBook
USD   34.99
Price excludes VAT (USA)
  • ISBN: 978-1-137-52971-8
  • Instant PDF download
  • Readable on all devices
  • Own it forever
  • Exclusive offer for individuals only
  • Tax calculation will be finalised during checkout
Softcover Book
USD   45.00
Price excludes VAT (USA)
Hardcover Book
USD   149.99
Price excludes VAT (USA)

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Barr, N. (2014) “Income Contingent Loans and Higher Education Financing: Theory and Practice,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 63–75.

    Google Scholar 

  • Chapman, B. and T. Higgins (2009) “An Income Contingent Loan for Extending Paid Parental Leave,” Australian Journal of Labour Economics, vol. 12, no. 2, pp. 197–216.

    Google Scholar 

  • Chapman, B., Higgins, T. and Stiglitz, J.E. (2014) “Introduction and Summary,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 1–11.

    Google Scholar 

  • Higgins, T. (2010) Essays in the Development and Costing of Income Contingent Loans, PhD thesis, College of Business and Economics, the Australian National University.

    Google Scholar 

  • Higgins, T. (2014) “Improving Paid Parental Leave through Income Contingent Loans,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 127–35.

    Google Scholar 

  • Human Rights and Equal Opportunity Commission (HREOC) (2002) A Time to Value. Proposal for a National Paid Maternity Leave Scheme, Sex Discrimination Unit, Sydney: HREOC.

    Google Scholar 

  • Long, N.V. (2014) “Income Contingent Loans: Toward a Piecewise Linear Scheme,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 49–60.

    Google Scholar 

  • O’Neill, S. (2004) Paid Maternity Leave, Parliament of Australia, Parliamentary Library, Canberra: AGPS.

    Google Scholar 

  • Productivity Commission (2009) Paid Parental Leave: Support for Parents with Newborn Children. Final Report, Canberra: AGPS.

    Google Scholar 

  • Racionero, M. (2014) “Income Contingent Loans for Higher Education and Beyond,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 223–37.

    Google Scholar 

  • Stiglitz, J.E. (2014) “Remarks on Income Contingent Loans: How Effective They Can be at Mitigating Risk?,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 31–8.

    Google Scholar 

  • Stiglitz, J.E. and J. Yun (2014) “Income Contingent Loans for the Unemployed: A Prelude to General Theory of the Efficient Provision of Social Insurance,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 180–204.

    Google Scholar 

  • Yun, J. (2014) “Aid Programs for Higher Education,” in Bruce Chapman, Timothy Higgins and Joseph E. Stiglitz (eds), Income Contingent Loans: Theory, Practice and Prospects, New York: Palgrave Macmillan, pp. 216–22.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Copyright information

© 2016 Timothy Higgins

About this chapter

Cite this chapter

Higgins, T. (2016). Income Contingent Loans for Social Policy: the Case of Paid Parental Leave. In: Stiglitz, J.E., Guzman, M. (eds) Contemporary Issues in Microeconomics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781137529718_10

Download citation