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Public and Private Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?

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  • Panu Poutvaara

Abstract

This paper investigates public and private choices between internationally applicable and country-specific education when graduates are mobile. Human capital depends on innate skills and study effort with either type of education. It is shown that national governments provide too few students with internationally applicable education, and too many with country-specific education. This effect is mitigated, but not entirely eliminated, by the introduction of a graduate tax, according to which graduates are required to pay part of their taxes to the country where they received their education, regardless of residence. However, private educational choices are socially optimal with suitably differentiated tuition fees. Copyright © The editors of the "Scandinavian Journal of Economics" 2008 .

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  • Panu Poutvaara, 2008. "Public and Private Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(3), pages 591-608, September.
  • Handle: RePEc:bla:scandj:v:110:y:2008:i:3:p:591-608
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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Alexander Haupt & Eckhard Janeba, 2009. "Education, redistribution and the threat of brain drain," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(1), pages 1-24, February.
    3. Justman, Moshe & Thisse, Jacques-Francois, 1997. "Implications of the mobility of skilled labor for local public funding of higher education," Economics Letters, Elsevier, vol. 55(3), pages 409-412, September.
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    5. Panu Poutvaara, 2004. "Educating Europe: Should Public Education be Financed with Graduate Taxes or Income-contingent Loans?," CESifo Economic Studies, CESifo, vol. 50(4), pages 663-684.
    6. Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, pages 33-53.
    7. Thum, Claudio & Uebelmesser, Silke, 2003. "Mobility and the Role of Education as a Commitment Device," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(5), pages 549-564, September.
    8. David E. Wildasin, 2000. "Labor-Market Integration, Investment in Risky Human Capital, and Fiscal Competition," American Economic Review, American Economic Association, pages 73-95.
    9. Guglielmo Maria Caporale, 2005. "The BDS Test as a Test for the Adequacy of a GARCH(1,1) Specification: A Monte Carlo Study," Journal of Financial Econometrics, Society for Financial Econometrics, pages 282-309.
    10. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, pages 29-46.
    11. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, pages 275-289.
    12. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, pages 275-289.
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    Cited by:

    1. Poutvaara, Panu, 2011. "The expansion of higher education and time-consistent taxation," European Journal of Political Economy, Elsevier, vol. 27(2), pages 257-267, June.
    2. Volker Grossmann & David Stadelmann, 2012. "Does High-skilled Migration Affect Publicly Financed Investments?," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 944-959, November.
    3. 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.
    4. Oprean, Victor-Bogdan, 2012. "Sustainability of the Romanian Social Security System. The Burden of Education," MPRA Paper 41432, University Library of Munich, Germany.
    5. Thushyanthan Baskaran & Zohal Hessami, 2012. "Public education spending in a globalized world:," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 677-707, October.
    6. Speciale, Biagio, 2012. "Does immigration affect public education expenditures? Quasi-experimental evidence," Journal of Public Economics, Elsevier, pages 773-783.
    7. Battisti, Michele & Felbermayr, Gabriel & Peri, Giovanni & Poutvaara, Panu, 2014. "Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare," IZA Discussion Papers 8574, Institute for the Study of Labor (IZA).
    8. 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.
    9. Frédéric Docquier & Hillel Rapoport, 2012. "Globalization, Brain Drain, and Development," Journal of Economic Literature, American Economic Association, pages 681-730.
    10. Christian Dustmann & Giovanni Facchini & Cora Signorotto, 2015. "Population, Migration, Ageing and Health: A Survey," Discussion Papers 2015-17, University of Nottingham, GEP.
    11. 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.
    12. Domenico Scalera, 2012. "Skilled Migration And Education Policies: Is There Still Scope For A Bhagwati Tax?," Manchester School, University of Manchester, vol. 80(4), pages 447-467, July.
    13. Alexander Haupt & Silke Übelmesser, 2009. "Voting on Labour-Market Integration and Education Policy when Citizens Differ in Mobility and Ability," CESifo Working Paper Series 2588, CESifo Group Munich.
    14. Martin Junge & Martin D. Munk & Panu Poutvaara, 2013. "International Migration of Couples," Norface Discussion Paper Series 2013018, Norface Research Programme on Migration, Department of Economics, University College London.
    15. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, pages 557-573.
    16. repec:hal:journl:hal-00779716 is not listed on IDEAS
    17. Delpierre, Matthieu & Verheyden, Bertrand, 2014. "Student and worker mobility under university and government competition," Journal of Public Economics, Elsevier, pages 26-41.
    18. Claire Naiditch & Radu Vranceanu, 2013. "A two-country model of high skill migration with public education," Working Papers hal-00779716, HAL.
    19. Thomas Lange, 2008. "Local Public Funding of Higher Education when Students and Skilled Workers are Mobile," Working Papers CIE 11, Paderborn University, CIE Center for International Economics.
    20. Oprean Victor Bogdan, 2014. "Migration Costs in Asymmetric Environments and Education Outsourcing. The Case of Romania," Scientific Annals of Economics and Business, De Gruyter Open, pages 1-15.
    21. Niklas Potrafke, 2013. "Economic Freedom and Government Ideology across the German States," Regional Studies, Taylor & Francis Journals, vol. 47(3), pages 433-449, March.

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