Public Funding of Higher Education when Students and Skilled Workers are Mobile
AbstractThe 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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Volume (Year): 65 (2009)
Issue (Month): 2 (June)
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Find related papers by JEL classification:
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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