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The Out-of-State Tuition Distortion

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  • Brian Knight
  • Nathan Schiff

Abstract

Public universities typically charge much higher tuition to nonresidents. We first investigate the welfare implications of this tuition gap in a simple model. While the social planner does not distinguish between residents and nonresidents, state governments set higher tuition for nonresidents. The welfare gains from reducing the tuition gap can be characterized by a sufficient statistic relating out-of-state enrollment to the tuition gap. We estimate this sufficient statistic via a border discontinuity design using data on the geographic distribution of students by institution.

Suggested Citation

  • Brian Knight & Nathan Schiff, 2019. "The Out-of-State Tuition Distortion," American Economic Journal: Economic Policy, American Economic Association, vol. 11(1), pages 317-350, February.
    • Handle: RePEc:aea:aejpol:v:11:y:2019:i:1:p:317-50
    Note: DOI: 10.1257/pol.20170499
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    References listed on IDEAS

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    Cited by:

    1. Zhao, Bo, 2019. "Consequences of state disinvestment in public higher education: lessons for the New England states," New England Public Policy Center Research Report 19-1, Federal Reserve Bank of Boston.
    2. Zhao, Bo, 2018. "Disinvesting in the future?: a comprehensive examination of the effects of state appropriations for public higher education," Working Papers 18-1, Federal Reserve Bank of Boston.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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