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Student and Worker Mobility under University and Government Competition

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  • Matthieu Delpierre
  • Bertrand Verheyden

Abstract

We provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a free-rider effect for governments, who are not willing to subsidize the education of agents who will work abroad. At equilibrium, the free-rider effect always dominates the competition effect, resulting in underinvestment in human capital and overinvestment in research. This inefficiency can be corrected if a transnational transfer for mobile students is implemented. With endogenous income taxation, we show that the strength of fiscal competition increases with human capital production. Consequently, supranational policies aimed at promoting teaching quality reduce tax revenues at the expense of research.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3415.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3415

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Keywords: student mobility; worker mobility; university competition; government competition;

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References

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  1. Bayoumi, T. & Coe, D.T. & Helpman, E., 1996. "R&D Spillovers and Global Growth," Papers 14-96, Tel Aviv.
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  26. repec:pse:psecon:2010-27 is not listed on IDEAS
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