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Public Funding of Higher Education when Students and Skilled Workers are Mobile

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Author Info
Thomas Lange

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Abstract

The interregional mobility of high-skilled workers may induce an underinvestment in local public higher education when subfederal entities independently decide on education expenditures to maximize local output. This well-known result, which is due to a positive interregional spillover of local education policy when some individuals emigrate upon graduation, can reverse once taking student mobility into account. When local education policy attracts foreign students, a negative spillover takes place, and the actual discrepancy between decentralized policy and the global-output-maximizing solution depends on the relative size of the two spillovers. The paper also presents a variant of the model with local governments' objectives resting exclusively upon natives' utility.

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Publisher Info
Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 65 (2009)
Issue (Month): 2 (June)
Pages: 178-199
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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200906)65:2_178:pfohew_2.0.tx_2-l

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Related research
Keywords: higher education; student mobility; high-skilled labor mobility; local public finance;

Find related papers by JEL classification:
I22 - Health, Education, and Welfare - - Education - - - Educational Finance
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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This page was last updated on 2009-12-1.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.