Is the U.S. Private Education Sector Infected by Baumol’s Cost Disease? Evidence from the 50 States
AbstractHigh and rising costs characterize the private education industry in the United States. This paper tests if Baumol’s cost disease of the service sector can explain some of the growth of private education spending. An empirical strategy developed by Hartwig (2008) and Colombier (2010) and a panel data set of all U.S. states over the period from 1980 to 2009 are used in the empirical analysis. The empirical results indicate that Baumol’s cost disease does infect the private education industry in the United States. The results are reasonably robust with respect to state- and time-fixed effects, two-stage least squares estimation, individual state time trends, and a variety of potentially important covariates.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 52300.
Date of creation: 16 Dec 2013
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Private education spending; Baumol's cost disease; aggregate productivity;
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- I20 - Health, Education, and Welfare - - Education - - - General
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