Valuing the benefits of the education provided by public universities: A case study of Minnesota
AbstractThis study estimates the value of the private and public benefits that accrue to Minnesota residents from state government subsidies to higher education. In 2005, the University of Minnesota and the Minnesota State Colleges and Universities system received $832 million from Minnesota's state government to support educational programs. These subsidies allow these institutions to offer lower tuition rates, increasing the number of Minnesotans with bachelor and graduate degrees. We calculate that removing these subsidies would eventually lead to 14,000 fewer graduate degree holders in Minnesota, and reduce those with bachelor's degrees or “some college” by 42,000. The annual economic cost of these subsidies is about $326 million; this is less than annual state appropriations because most of those appropriations are income transfers from taxpayers to students, not an economic cost. We estimate that the annual value of the benefits of these subsidies is between $531 and $786 million ($381 and $570 million) when a 3% (5%) discount rate is used. We also discuss some of the income distribution consequences.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics of Education Review.
Volume (Year): 30 (2011)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/econedurev
Higher education subsidies; Cost–benefit analysis; Social benefits; Distributional impacts; Minnesota;
Find related papers by JEL classification:
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance
- I23 - Health, Education, and Welfare - - Education - - - Higher Education and Research Institutions
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
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