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State competition in higher education: A race to the top, or a race to the bottom?

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  • Michael Bailey
  • Mark Rom
  • Matthew Taylor

Abstract

How does competition affect higher education? This paper explores this question for public and private universities. Theory indicates that competition can push higher education policy in one of two different directions. On the one hand, competition may increase spending. For states, this would occur if states treat higher education as “developmental;” for private universities this would occur if they view spending as a means to attract students and prestige. On the other hand, competition may decrease spending if states treat higher education spending as “redistributive,” and competition may decrease spending by private schools if lower spending enhances their ability to attract students with low tuition. To determine which of these perspectives is most valid, we examine higher education policy choices in the 1980s and 1990s. We find that states appear to act as if higher education funding is “redistributive” while private schools appear to compete more on the basis of tuition than spending. These results demonstrate the important effects competition and governance structure have on higher education. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Michael Bailey & Mark Rom & Matthew Taylor, 2004. "State competition in higher education: A race to the top, or a race to the bottom?," Economics of Governance, Springer, vol. 5(1), pages 53-75, April.
    • Handle: RePEc:spr:ecogov:v:5:y:2004:i:1:p:53-75
    DOI: 10.1007/s10101-002-0052-0
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    Citations

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    Cited by:

    1. Joan Costa-i-Font & Filipe De-Albuquerque & Hristos Doucouliagos, 2011. "How Significant are Fiscal Interactions in Federations? A Meta-Regression Analysis," CESifo Working Paper Series 3517, CESifo.
    2. Cletus C. Coughlin & Thomas A. Garrett & Rubén Hernández-Murillo, 2007. "Spatial Dependence in Models of State Fiscal Policy Convergence," Public Finance Review, , vol. 35(3), pages 361-384, May.
    3. Bruckmeier Kerstin & Fischer Georg-Benedikt & Wigger Berthold U., 2015. "Studiengebühren in Deutschland: Lehren aus einem gescheiterten Experiment," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(3), pages 289-301, October.
    4. Stephan J Goetz & Mark D Partridge & Dan S Rickman & Shibalee Majumdar, 2011. "Sharing the Gains of Local Economic Growth: Race-to-the-Top versus Race-to-the-Bottom Economic Development," Environment and Planning C, , vol. 29(3), pages 428-456, June.
    5. Georg-Benedikt Fischer & Berthold U. Wigger, 2016. "Fiscal Competition and Higher Education Spending in Germany," German Economic Review, Verein für Socialpolitik, vol. 17(2), pages 234-252, May.
    6. Costa-i-Font, Joan & De-Albuquerque, Filipe & Doucouliagos, Hristos, 2011. "How significant are fiscal interactions in designing federations?: a meta-regression analysis," LSE Research Online Documents on Economics 37535, London School of Economics and Political Science, LSE Library.
    7. David Hugh-Jones, 2009. "Constitutions and Policy Comparisons," Journal of Theoretical Politics, , vol. 21(1), pages 25-61, January.
    8. Michael K. McLendon & David A. Tandberg & Nicholas W. Hillman, 2014. "Financing College Opportunity," The ANNALS of the American Academy of Political and Social Science, , vol. 655(1), pages 143-162, September.

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