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Financing Higher Education in a Mobile World

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  • GABRIELLE DEMANGE
  • ROBERT FENGE
  • SILKE UEBELMESSER

Abstract

This paper analyzes how integrated labor markets affect the financing of higher education. For this, we employ a general-equilibrium model with overlapping generations and individuals who differ in their abilities. At the first stage, governments can choose the quality of education and the financing system. At the second stage, individuals make their education and migration decisions given the governmental framework for higher education and the mobility assumptions. In a closed economy and in the presence of imperfect credit markets, a mix of tax- and fee-financing is optimal. In integrated labor markets, countries have an incentive to attract skilled workers and to free-ride on education provided by other countries. When only skilled workers are mobile, there is a suboptimal shift from taxes to fees and the number of students is too low. When also students can migrate, there is a countervailing force such that maintaining the optimal financial mix becomes possible.

Suggested Citation

  • Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2014. "Financing Higher Education in a Mobile World," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 343-371, June.
    • Handle: RePEc:bla:jpbect:v:16:y:2014:i:3:p:343-371
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    File URL: http://hdl.handle.net/10.1111/jpet.12064
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    Citations

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    Cited by:

    1. Maria Racionero & Elena Del Rey, 2012. "Choosing the type of income-contingent loan: risk-sharing versus risk-pooling," CEPR Discussion Papers 671, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    2. Maria Racionero & Elena Del Rey, 2012. "Choosing the type of income-contingent loan: risk-sharing versus risk-pooling," CEPR Discussion Papers 671, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    3. Lewis Evans & Neil Quigley, 2013. "Intergenerational Contracts and Time Consistency: Implications for Policy Settings and Governance in the Social Welfare System," Treasury Working Paper Series 13/25, New Zealand Treasury.
    4. Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2020. "Competition in the quality of higher education: the impact of student mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1224-1263, October.
    5. Aldieri, Luigi & Kotsemir, Maxim & Vinci, Concetto Paolo, 2018. "The impact of research collaboration on academic performance: An empirical analysis for some European countries," Socio-Economic Planning Sciences, Elsevier, vol. 62(C), pages 13-30.
    6. Haupt, Alexander & Krieger, Tim & Lange, Thomas, 2013. "Education policy, student migration, and brain gain," Discussion Paper Series 2013-05, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    7. Rainald Borck & Silke Uebelmesser & Martin Wimbersky, 2015. "The Political Economics of Higher-Education Finance for Mobile Individuals," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 71(1), pages 82-105, March.
    8. Marcel Gérard & Silke Übelmesser, 2013. "Globalization and Access to Higher Education – Policy Implications," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(2), pages 03-10, 07.
    9. Tina Haussen & Silke Uebelmesser, 2016. "Student and graduate migration and its effect on the financing of higher education," Education Economics, Taylor & Francis Journals, vol. 24(6), pages 573-591, November.
    10. Silke Übelmesser & Marcel Gérard, 2014. "Financing Higher Education when Students and Graduates are Internationally Mobile," Jena Economics Research Papers 2014-009, Friedrich-Schiller-University Jena.
    11. Chantal Oggenfuss & Stefan C. Wolter, 2019. "Are they coming back? The mobility of university graduates in switzerland [Kehren sie Zurück? Die Mobilität von Hochschulabsolventinnen und -Absolventen in der Schweiz]," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 39(2), pages 189-208, October.
    12. Fricke, Hans, 2014. "Tuition Fees and Student Achievement - Evidence from a Differential Raise in Fees," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100521, Verein für Socialpolitik / German Economic Association.
    13. Georg-Benedikt Fischer & Berthold U. Wigger, 2016. "Fiscal Competition and Higher Education Spending in Germany," German Economic Review, Verein für Socialpolitik, vol. 17(2), pages 234-252, May.

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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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