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The Economic Impact of Colleges and Universities

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  • John J. Siegfried

    ()
    (Department of Economics, Vanderbilt University and AEA)

  • Allen R. Sanderson

    ()
    (Department of Economics, University of Chicago)

  • Peter McHenry

    ()
    (Department of Economics, Yale University)

Abstract

This essay describes methodological approaches and pitfalls common to studies of the economic impact of colleges and universities. Such studies often claim local benefits that imply annualized rates of return on local investment exceeding 100 percent. We address problems in these studies pertaining to the specification of the counterfactual, the definition of the local area, the identification of "new" expenditures, the tendency to double count economic impacts, the role of local taxes, and the omission of local spillover benefits from enhanced human capital created by higher education, and offer several suggestions for improvement. If these economic impact studies were conducted at the level of accuracy most institutions require of faculty research, their claims of local economic benefits would not be so preposterous, and, as a result, trust in and respect for higher education officials would be enhanced.

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File URL: http://www.accessecon.com/pubs/VUECON/vu06-w12.pdf
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0612.

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Date of creation: May 2006
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Handle: RePEc:van:wpaper:0612

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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Keywords: Colleges; universities; local economic impact; economic impact study;

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Cited by:
  1. Bernard F. Lentz & David N. Laband, 2008. "The Impact of College Athletics on Employment in the Restaurant and Accommodations Industries," Working Papers 0803, International Association of Sports Economists & North American Association of Sports Economists.
  2. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution," Working Papers 1015, University of Strathclyde Business School, Department of Economics.
  3. Timothy J. Bartik & George Erickcek, 2007. "Higher Education, the Health Care Industry, and Metropolitan Regional Economic Development: What Can “Eds & Meds” Do for the Economic Fortunes of a Metro Area’s Residents?," Upjohn Working Papers and Journal Articles 08-140, W.E. Upjohn Institute for Employment Research.
  4. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Northern Irish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," Working Papers 1025, University of Strathclyde Business School, Department of Economics.
  5. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure," Working Papers 1029, University of Strathclyde Business School, Department of Economics.
  6. Blomquist Glenn C. & Troske Kenneth R. & Coomes Paul A. & Jepsen Christopher & Koford Brandon C., 2014. "Estimating the social value of higher education: willingness to pay for community and technical colleges," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(1), pages 39, January.
  7. Jose M. Pastor & Juan Fernández de Guevara & Francisco Pérez, 2010. "Measuring the local economic impact of universities: an approach that considers uncertainty," Investigaciones de Economía de la Educación volume 5, in: María Jesús Mancebón-Torrubia & Domingo P. Ximénez-de-Embún & José María Gómez-Sancho & Greg (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 54, pages 1061-1090 Asociación de Economía de la Educación.
  8. Rebecca Bess & Zoë O. Ambargis, 2011. "Input-Output Models for Impact Analysis:Suggestions for Practitioners Using RIMS II Multipliers," BEA Working Papers 0081, Bureau of Economic Analysis.
  9. Zoë O. Ambargis & Thomas McComb & Carol A. Robbins, 2011. "Estimating the Local Economic Impacts of University Activity Using a Bill of Goods Approach," BEA Working Papers 0074, Bureau of Economic Analysis.
  10. José António Pacheco Sequeira & Aurora A. C. Teixeira, 2011. "Assessing the influence and impact of R&D institutions by mapping international scientific networks: the case of INESC Porto," Economics and Management Research Projects: An International Journal, Open Access International Journals, vol. 1(1), pages 8-19, February.
  11. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," Working Papers 1022, University of Strathclyde Business School, Department of Economics.
  12. Eduardo Ferreira Vinhais, Henrique & Guilhoto, Joaquim José Martins, 2012. "Economic impact of the expansion of federal universities in Brazil," MPRA Paper 53998, University Library of Munich, Germany.

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