Performance-related Funding of Universities – Does more Competition Lead to Grade Inflation?
AbstractGerman universities are regarded as being under-financed, inefficient, and performing below average if compared to universities in other European countries and the US. Starting in the 1990s, several German federal states implemented reforms to improve this situation. An important part of these reforms has been the introduction of indicator-based funding systems. These financing systems aimed at increasing the competition between universities by making their public funds dependent on their relative performance concerning different output measures, such as the share of students obtaining a degree or the amount of third party funds. This paper evaluates whether the indicator-based funding created unintended incentives, i.e. whether the reform caused a grade inflation. Estimating mean as well as quantile treatment effects, we cannot support the hypothesis that increased competition between universities causes grade inflation.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0288.
Length: 23 pages
Date of creation: Oct 2011
Date of revision:
Other versions of this item:
- Bauer, Thomas K. & Grave, Barbara S., 2011. "Performance-related Funding of Universities: Does More Competition Lead to Grade Inflation?," IZA Discussion Papers 6073, Institute for the Study of Labor (IZA).
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-19 (All new papers)
- NEP-EDU-2011-12-19 (Education)
- NEP-EUR-2011-12-19 (Microeconomic European Issues)
- NEP-IPR-2011-12-19 (Intellectual Property Rights)
- NEP-LAB-2011-12-19 (Labour Economics)
- NEP-SOG-2011-12-19 (Sociology of Economics)
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