IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

On the Optimal Allocation of Students and Resources in a System of Higher Education

  • Sallee James M


    (University of Michigan)

  • Resch Alexandra M


    (University of Michigan)

  • Courant Paul N


    (University of Michigan)

We model the social planner's decision to establish universities and populate them with students and resources, given a distribution of student ability and a limited pool of resources for higher education. If student ability and school resources are complements, and if there is a fixed cost to establishing a school, then the optimal allocation will involve a tiered system of higher education that sorts students by ability. In contrast to previous research, we show this tiered system is optimal even in the absence of peer effects. In considering where to locate students, the planner balances the benefit of providing students with more resources against the congestion costs of overcrowding schools. Nearly identical students who are close to the margin of entry to a higher or lower tier will experience discrete gaps in education quality. In considering how many universities to establish, the planner will balance the value of more precise tailoring against the cost of establishing additional schools. The planner's inability to perfectly tailor education quality will result in both winners and losers. Our model also makes predictions about how university systems that serve different populations should vary. Larger systems will produce more per dollar of expenditures and more education per student, due to economies of scale.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 8 (2008)
Issue (Month): 1 (June)
Pages: 1-26

in new window

Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:11
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:11. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.