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Local public funding of higher education when skilled labor is mobile

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  • JUSTMAN, Moshe

    (Department of Economics and Monaster Center for Economic Research Ben Gurion University of the Negev Beer Sheva, Israel)

  • THISSE, Jacques-Francois

    ()
    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Abstract

Inter-jurisdictional labor mobility when public funding of higher education is sub-federal leads to a disparity between the centralized output-maximizing allocation of resources to education and decentralized equilibria. We show that when local governments choose their level of spending on higher education at a Nash equilibrium, the size and direction of this disparity depend strongly on the political balance of forces at the sub-federal level. The more common case of under-investment can be alleviated through inter-jurisdictional subsidies of local education expenditures based on net migration flows.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997024.

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Date of creation: 01 Apr 1997
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Handle: RePEc:cor:louvco:1997024

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Cited by:
  1. Justman, Moshe & Thisse, Jacques-François & van Ypersele, Tanguy, 2001. "Taking the Bite Out of Fiscal Competition," CEPR Discussion Papers 3109, C.E.P.R. Discussion Papers.
  2. Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2012. "Financing Higher Education in a Mobile World," CESifo Working Paper Series 3849, CESifo Group Munich.
  3. Hartmut Egger & Josef Falkinger & Volker Grossmann, 2012. "Brain Drain, Fiscal Competition, and Public Education Expenditure," Review of International Economics, Wiley Blackwell, vol. 20(1), pages 81-94, 02.

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