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The economic impact of colleges and universities

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  • Siegfried, John J.
  • Sanderson, Allen R.
  • McHenry, Peter

Abstract

This essay describes methodological approaches and pitfalls common to studies of the economic impact of colleges and universities. Such studies often claim local benefits that imply annualized rates of return on local investment exceeding 100 percent. We address problems in these studies pertaining to the specification of the counterfactual, the definition of the local area, the identification of "new" expenditures, the tendency to double count economic impacts, the role of local taxes, and the omission of local spillover benefits from enhanced human capital created by higher education, and offer several suggestions for improvement. If these economic impact studies were conducted at the level of accuracy most institutions require of faculty research, their claims of local economic benefits would not be so preposterous, and, as a result, trust in and respect for higher education officials would be enhanced.

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Bibliographic Info

Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 26 (2007)
Issue (Month): 5 (October)
Pages: 546-558

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Handle: RePEc:eee:ecoedu:v:26:y:2007:i:5:p:546-558

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Web page: http://www.elsevier.com/locate/econedurev

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References

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  1. Bound, John & Groen, Jeffrey & Kezdi, G.Gabor & Turner, Sarah, 2004. "Trade in university training: cross-state variation in the production and stock of college-educated labor," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 143-173.
  2. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," NBER Working Papers 7444, National Bureau of Economic Research, Inc.
  3. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
  4. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
  5. Lance Lochner & Enrico Moretti, 2001. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," NBER Working Papers 8605, National Bureau of Economic Research, Inc.
  6. Melanie Blackwell & Steven Cobb & David Weinberg, 2002. "The Economic Impact of Educational Institutions: Issues and Methodology," Economic Development Quarterly, , vol. 16(1), pages 88-95, February.
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  8. Glaeser, E.L. & Scheinkman, J.A., 1993. "Economic Growth in a Cross-Section of Cities," Harvard Institute of Economic Research Working Papers 1645, Harvard - Institute of Economic Research.
  9. Lange, Fabian & Topel, Robert, 2006. "The Social Value of Education and Human Capital," Handbook of the Economics of Education, Elsevier.
  10. Groen, J.A.Jeffrey A., 2004. "The effect of college location on migration of college-educated labor," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 125-142.
  11. Janet Currie & Enrico Moretti, 2003. "Mother'S Education And The Intergenerational Transmission Of Human Capital: Evidence From College Openings," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1495-1532, November.
  12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  13. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November.
  14. Getz, Malcom & Huang, Yuh-ching, 1978. "Consumer Revealed Preference for Environmental Goods," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 449-58, August.
  15. Milligan, Kevin & Moretti, Enrico & Oreopoulos, Philip, 2004. "Does education improve citizenship? Evidence from the United States and the United Kingdom," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1667-1695, August.
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Citations

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Cited by:
  1. Blomquist, Glenn C. & Coomes, Paul A. & Jepsen, Christopher & Koford, Brandon C. & Troske, Kenneth, 2009. "Estimating the Social Value of Higher Education: Willingness to Pay for Community and Technical Colleges," IZA Discussion Papers 4086, Institute for the Study of Labor (IZA).
  2. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Northern Irish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," Working Papers 1025, University of Strathclyde Business School, Department of Economics.
  3. Bernard F. Lentz & David N. Laband, 2008. "The Impact of College Athletics on Employment in the Restaurant and Accommodations Industries," Working Papers 0803, International Association of Sports Economists & North American Association of Sports Economists.
  4. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," Working Papers 1022, University of Strathclyde Business School, Department of Economics.
  5. José António Pacheco Sequeira & Aurora A. C. Teixeira, 2011. "Assessing the influence and impact of R&D institutions by mapping international scientific networks: the case of INESC Porto," Economics and Management Research Projects: An International Journal, Open Access International Journals, vol. 1(1), pages 8-19, February.
  6. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution," Working Papers 1015, University of Strathclyde Business School, Department of Economics.
  7. Zoë O. Ambargis & Thomas McComb & Carol A. Robbins, 2011. "Estimating the Local Economic Impacts of University Activity Using a Bill of Goods Approach," BEA Working Papers 0074, Bureau of Economic Analysis.
  8. Timothy J. Bartik & George Erickcek, 2007. "Higher Education, the Health Care Industry, and Metropolitan Regional Economic Development: What Can “Eds & Meds” Do for the Economic Fortunes of a Metro Area’s Residents?," Upjohn Working Papers and Journal Articles 08-140, W.E. Upjohn Institute for Employment Research.
  9. Rebecca Bess & Zoë O. Ambargis, 2011. "Input-Output Models for Impact Analysis:Suggestions for Practitioners Using RIMS II Multipliers," BEA Working Papers 0081, Bureau of Economic Analysis.
  10. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure," Working Papers 1029, University of Strathclyde Business School, Department of Economics.
  11. Jose M. Pastor & Juan Fernández de Guevara & Francisco Pérez, 2010. "Measuring the local economic impact of universities: an approach that considers uncertainty," Investigaciones de Economía de la Educación volume 5, in: María Jesús Mancebón-Torrubia & Domingo P. Ximénez-de-Embún & José María Gómez-Sancho & Greg (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 54, pages 1061-1090 Asociación de Economía de la Educación.
  12. Eduardo Ferreira Vinhais, Henrique & Guilhoto, Joaquim José Martins, 2012. "Economic impact of the expansion of federal universities in Brazil," MPRA Paper 53998, University Library of Munich, Germany.

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