IDEAS home Printed from https://ideas.repec.org/a/eee/respol/v51y2022i1s0048733321001980.html
   My bibliography  Save this article

Education premium and the compound impact of universities on their regional economy

Author

Listed:
  • Janzen, Katrin
  • Panitz, Robert
  • Glückler, Johannes

Abstract

Although the positive impact of higher education on regional economies is widely recognized, empirical assessment of the magnitude of its periodic financial impact remains a puzzle. Conventional impact studies have focused on the regional effects of periodic university spending, neglecting the core functions of higher education institutions. To overcome these shortcomings, we develop the concept of a differential regional education premium and implement it in an extended regional multiplier model. The new model integrates university expenditures and education into a compound effect on regional gross value added. Empirically, we find that the education premium increases the traditional effects of state universities in Baden-Württemberg by 68 percent. Generally, the model can be applied to other regions internationally by adapting to regional factors, such as graduate retention, tuition fees, wage levels and occupational qualifications in regional labor markets.

Suggested Citation

  • Janzen, Katrin & Panitz, Robert & Glückler, Johannes, 2022. "Education premium and the compound impact of universities on their regional economy," Research Policy, Elsevier, vol. 51(1).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:1:s0048733321001980
    DOI: 10.1016/j.respol.2021.104402
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0048733321001980
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.respol.2021.104402?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    2. Youtie, Jan & Shapira, Philip, 2008. "Building an innovation hub: A case study of the transformation of university roles in regional technological and economic development," Research Policy, Elsevier, vol. 37(8), pages 1188-1204, September.
    3. Roderik Ponds & Frank van Oort & Koen Frenken, 2010. "Innovation, spillovers and university--industry collaboration: an extended knowledge production function approach," Journal of Economic Geography, Oxford University Press, vol. 10(2), pages 231-255, March.
    4. Lauer, Charlotte & Steiner, Viktor, 2000. "Returns to education in West Germany: an empirical assessment," ZEW Discussion Papers 00-04, ZEW - Leibniz Centre for European Economic Research.
    5. Grossman, Michael, 2006. "Education and Nonmarket Outcomes," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 10, pages 577-633, Elsevier.
    6. Ana M. Ferrer & W. Craig Riddell, 2002. "The role of credentials in the Canadian labour market," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(4), pages 879-905, November.
    7. 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.
    8. Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 1, number 1, June.
    9. Alessandra Faggian & Jonathan Corcoran & Rachel S. Franklin, 2017. "Human-capital migration and salaries: an examination of US college graduates," Chapters, in: Jonathan Corcoran & Alessandra Faggian (ed.), Graduate Migration and Regional Development, chapter 10, pages 202-219, Edward Elgar Publishing.
    10. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, March.
    11. Rui Baptista & Joana Mendonça, 2010. "Proximity to knowledge sources and the location of knowledge-based start-ups," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 5-29, August.
    12. Stoetzer, Matthias-Wolfgang & Krähmer, Christian, 2007. "Regionale Nachfrageeffekte der Hochschulen - methodische Probleme und Ergebnisse empirischer Untersuchungen für die Bundesrepublik Deutschland," Jena Contributions to Economic Research 2007,6, Ernst-Abbe-Hochschule Jena – University of Applied Sciences, Department of Business Administration.
    13. Pischner, Rainer & Stäglin, Reiner, 1976. "Darstellung des um den Keynes'schen Multiplikator erweiterten offenen statischen Input-Output-Modells," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 9(3), pages 345-349.
    14. Pfister, Curdin & Koomen, Miriam & Harhoff, Dietmar & Backes-Gellner, Uschi, 2021. "Regional innovation effects of applied research institutions," Research Policy, Elsevier, vol. 50(4).
    15. Harvey Goldstein & Catherine Renault, 2004. "Contributions of Universities to Regional Economic Development: A Quasi-experimental Approach," Regional Studies, Taylor & Francis Journals, vol. 38(7), pages 733-746.
    16. Sue Cox & Jim Taylor, 2006. "The Impact of a Business School on Regional Economic Development: a Case Study," Local Economy, London South Bank University, vol. 21(2), pages 117-135, May.
    17. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    18. Silke Anger & Guido Heineck, 2010. "Cognitive abilities and earnings - first evidence for Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 17(7), pages 699-702.
    19. D'Este, P. & Patel, P., 2007. "University-industry linkages in the UK: What are the factors underlying the variety of interactions with industry?," Research Policy, Elsevier, vol. 36(9), pages 1295-1313, November.
    20. Hubert Strauss & Christine de la Maisonneuve, 2007. "The Wage Premium on Tertiary Education: New Estimates for 21 OECD Countries," OECD Economics Department Working Papers 589, OECD Publishing.
    21. Dickson, Matt & Harmon, Colm, 2011. "Economic returns to education: What We Know, What We Don’t Know, and Where We Are Going—Some brief pointers," Economics of Education Review, Elsevier, vol. 30(6), pages 1118-1122.
    22. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5, March.
    23. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    24. Leten, Bart & Landoni, Paolo & Van Looy, Bart, 2014. "Science or graduates: How do firms benefit from the proximity of universities?," Research Policy, Elsevier, vol. 43(8), pages 1398-1412.
    25. Anger, Christina & Plünnecke, Axel & Schmidt, Jörg, 2010. "Bildungsrenditen in Deutschland: Einflussfaktoren, politische Optionen und ökonomische Effekte," IW-Analysen, Institut der deutschen Wirtschaft (IW) / German Economic Institute, volume 65, number 65.
    26. Daniel Boothby & Torben Drewes, 2006. "Postsecondary Education in Canada: Returns to University, College and Trades Education," Canadian Public Policy, University of Toronto Press, vol. 32(1), pages 1-22, March.
    27. Vincett, P.S., 2010. "The economic impacts of academic spin-off companies, and their implications for public policy," Research Policy, Elsevier, vol. 39(6), pages 736-747, July.
    28. Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 2, number 2, June.
    29. Bozeman, Barry & Youtie, Jan, 2017. "Socio-economic impacts and public value of government-funded research: Lessons from four US National Science Foundation initiatives," Research Policy, Elsevier, vol. 46(8), pages 1387-1398.
    30. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    31. A. T. Flegg & C. D. Webber, 2000. "Regional Size, Regional Specialization and the FLQ Formula," Regional Studies, Taylor & Francis Journals, vol. 34(6), pages 563-569.
    32. Etzkowitz, Henry & Webster, Andrew & Gebhardt, Christiane & Terra, Branca Regina Cantisano, 2000. "The future of the university and the university of the future: evolution of ivory tower to entrepreneurial paradigm," Research Policy, Elsevier, vol. 29(2), pages 313-330, February.
    33. Ben R. Martin, 2012. "Are universities and university research under threat? Towards an evolutionary model of university speciation," Cambridge Journal of Economics, Oxford University Press, vol. 36(3), pages 543-565.
    34. Petter Lundborg, 2013. "The health returns to schooling—what can we learn from twins?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 673-701, April.
    35. Siegfried, John J. & Sanderson, Allen R. & McHenry, Peter, 2007. "The economic impact of colleges and universities," Economics of Education Review, Elsevier, vol. 26(5), pages 546-558, October.
    36. Amnon Frenkel & Eran Leck, 2017. "Spatial aspects of education–job matching in Israel," Regional Studies, Taylor & Francis Journals, vol. 51(7), pages 1063-1076, July.
    37. Jonathan Corcoran & Alessandra Faggian (ed.), 2017. "Graduate Migration and Regional Development," Books, Edward Elgar Publishing, number 16152.
    38. Paula Prenzel & Simona Iammarino, 2021. "Labor Force Aging and the Composition of Regional Human Capital," Economic Geography, Taylor & Francis Journals, vol. 97(2), pages 140-163, March.
    39. Anthony T. Flegg & Timo Tohmo, 2013. "Regional Input--Output Tables and the FLQ Formula: A Case Study of Finland," Regional Studies, Taylor & Francis Journals, vol. 47(5), pages 703-721, May.
    40. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    41. Michaela Trippl & Tanja Sinozic & Helen Lawton Smith, 2015. "The Role of Universities in Regional Development: Conceptual Models and Policy Institutions in the UK, Sweden and Austria," European Planning Studies, Taylor & Francis Journals, vol. 23(9), pages 1722-1740, September.
    42. Daniel Felsenstein, 1996. "The University in the Metropolitan Arena: Impacts and Public Policy Implications," Urban Studies, Urban Studies Journal Limited, vol. 33(9), pages 1565-1580, November.
    43. Rhiannon Pugh, 2017. "Universities and economic development in lagging regions: ‘triple helix’ policy in Wales," Regional Studies, Taylor & Francis Journals, vol. 51(7), pages 982-993, July.
    44. Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 733-740, November.
    45. Stefano Breschi & Francesco Lissoni, 2009. "Mobility of skilled workers and co-invention networks: an anatomy of localized knowledge flows," Journal of Economic Geography, Oxford University Press, vol. 9(4), pages 439-468, July.
    46. Feller, Irwin & Ailes, Catherine P. & Roessner, J. David, 2002. "Impacts of research universities on technological innovation in industry: evidence from engineering research centers," Research Policy, Elsevier, vol. 31(3), pages 457-474, March.
    47. Jason Owen-Smith & Walter W. Powell, 2004. "Knowledge Networks as Channels and Conduits: The Effects of Spillovers in the Boston Biotechnology Community," Organization Science, INFORMS, vol. 15(1), pages 5-21, February.
    48. Huang, Mu-Hsuan & Chen, Dar-Zen, 2017. "How can academic innovation performance in university–industry collaboration be improved?," Technological Forecasting and Social Change, Elsevier, vol. 123(C), pages 210-215.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wei, Shihao & Su, Zhongfeng & Ahlstrom, David & Wu, Zhan, 2023. "State fragility and informal entrepreneurship: The moderating effects of human capital under varying temporal orientations," Journal of International Management, Elsevier, vol. 29(1).
    2. Yue Xu & Zihao Xu & Dayu Zhai & Yanyu Li, 2023. "Effects of Higher Education on Green Eco-Efficiency and Its Optimization Path: Case Study of China," Sustainability, MDPI, vol. 15(18), pages 1-19, September.
    3. Stefano Basilico & Nils Grashof, 2023. "The transition of brown regions: A matter of timing?," Jena Economics Research Papers 2023-003, Friedrich-Schiller-University Jena.
    4. Johannes Glückler & Robert Panitz, 2023. "Live Music in the Time of Corona: On the Resilience and Impact of a Philharmonic Orchestra on the Urban Economy," Sustainability, MDPI, vol. 15(4), pages 1-14, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blomquist, Glenn C. & Coomes, Paul A. & Jepsen, Christopher & Koford, Brandon C. & Troske, Kenneth R., 2014. "Estimating the social value of higher education: willingness to pay for community and technical colleges," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(1), pages 3-41, January.
    2. Lisa Grazzini, 2016. "The Importance of the Quality of Education: Some Determinants and its Effects on Earning Returns and Economic Growth," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(2), pages 43-82.
    3. Powdthavee, Nattavudh, 2021. "Education and pro-environmental attitudes and behaviours: A nonparametric regression discontinuity analysis of a major schooling reform in England and Wales," Ecological Economics, Elsevier, vol. 181(C).
    4. Mona Said & Fatma El-Hamidi, 2008. "Taking Technical Education Seriously in MENA: Determinants, Labor Market Implications and Policy Lessons," Working Papers 450, Economic Research Forum, revised 09 Jan 2008.
    5. Eyal Argov, 2018. "The Development Of Education In Israel And Its Contribution To Long-Term Growth," Israel Economic Review, Bank of Israel, vol. 16(1), pages 1-40.
    6. Ludger Wößmann, 2008. "Efficiency and equity of European education and training policies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(2), pages 199-230, April.
    7. Wößmann, Ludger, 2000. "Specifying Human Capital: A Review, Some Extensions, and Development Effects," Kiel Working Papers 1007, Kiel Institute for the World Economy (IfW Kiel).
    8. Growiec, Jakub, 2010. "Human Capital, Aggregation, And Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 14(2), pages 189-211, April.
    9. Lim, Jamus Jerome & Adams-Kane, Jonathon, 2008. "Institutions, Education, and Economic Performance," MPRA Paper 11800, University Library of Munich, Germany.
    10. Damon, Amy & Glewwe, Paul, 2011. "Valuing the benefits of the education provided by public universities: A case study of Minnesota," Economics of Education Review, Elsevier, vol. 30(6), pages 1242-1261.
    11. Park, Seonyoung, 2011. "Returning to school for higher returns," Economics of Education Review, Elsevier, vol. 30(6), pages 1215-1228.
    12. Titus J. Galama & Hans van Kippersluis, 2013. "Health Inequalities through the Lens of Health Capital Theory: Issues, Solutions, and Future Directions," Tinbergen Institute Discussion Papers 13-076/V, Tinbergen Institute.
    13. Michelle Riboud, 2016. "Investing in Inclusive Human Development," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 8(2), pages 168-200, May.
    14. Trostel, Philip A., 2005. "Nonlinearity in the Return to Education," Journal of Applied Economics, Universidad del CEMA, vol. 8(1), pages 1-12, May.
    15. Lê, Félice & Diez Roux, Ana & Morgenstern, Hal, 2013. "Effects of child and adolescent health on educational progress," Social Science & Medicine, Elsevier, vol. 76(C), pages 57-66.
    16. B. Müge Tunaer & Yaprak Gülcan, 2006. "Measuring Returns to Education in Turkey," Papers of the Annual IUE-SUNY Cortland Conference in Economics, in: Oguz Esen & Ayla Ogus (ed.), Proceedings of the Conference on Human and Economic Resources, pages 66-71, Izmir University of Economics.
    17. Muhammad Nauman Malik & Masood Sarwar Awan, 2016. "Analysing Econometric Bias and Non-linearity in Returns to Education of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 837-851.
    18. Daniele Checchi, 2001. "Education, Inequality and Income Inequality," STICERD - Distributional Analysis Research Programme Papers 52, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    19. Park, Jungsoo, 2006. "Dispersion of human capital and economic growth," Journal of Macroeconomics, Elsevier, vol. 28(3), pages 520-539, September.
    20. Chris Papageorgiou & Fidel Perez‐Sebastian, 2007. "Is the Asymptotic Speed of Convergence a Good Proxy for the Transitional Growth Path?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 1-24, February.

    More about this item

    Keywords

    Education premium; Regional multiplier analysis; Regional development; Universities; Baden-Württemberg;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:51:y:2022:i:1:s0048733321001980. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/respol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.