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The welfare effects of discriminating between in-state and out-of-state students

  • Hübner, Malte

In countries with a decentralized provision of higher education, local governments have incentives to levy higher fees on out-of-state students. This paper analyzes the implications of such preferential fee regimes for welfare and the number of students in a federation by means of a theoretical model in which higher education policies are determined non-cooperatively by local governments. In contrast to the literature on preferential tax regimes (e.g. Keen, 2001; Haupt and Peters, 2005), in my model, a restriction of preferential fee regimes raises federal welfare and enrollment in higher education.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 42 (2012)
Issue (Month): 1-2 ()
Pages: 364-374

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Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:364-374
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  1. Tim Krieger & Thomas Lange, 2010. "Education policy and tax competition with imperfect student and labor mobility," International Tax and Public Finance, Springer, vol. 17(6), pages 587-606, December.
  2. Janeba, Eckhard & Smart, Michael, 2003. "Is Targeted Tax Competition Less Harmful Than Its Remedies?," International Tax and Public Finance, Springer, vol. 10(3), pages 259-80, May.
  3. Noorbakhsh, Abbas & Culp, David, 2002. "The demand for higher education: Pennsylvania's nonresident tuition experience," Economics of Education Review, Elsevier, vol. 21(3), pages 277-286, June.
  4. Keen, Michael, 2001. "Preferential Regimes Can Make Tax Competition Less Harmful," National Tax Journal, National Tax Association, vol. 54(n. 4), pages 757-62, December.
  5. 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.
  6. Lydia Mechtenberg & Roland Strausz, . "The Bologna Process: How student mobility affects multi-cultural skills and educational quality," Papers 030, Departmental Working Papers.
  7. Oliver Busch & Benjamin Weigert, 2010. "Where have all the graduates gone? Internal cross-state migration of graduates in Germany 1984–2004," The Annals of Regional Science, Springer, vol. 44(3), pages 559-572, June.
  8. Kemnitz, Alexander, 2007. "Educational Federalism and the Quality Effects of Tuition Fees," Dresden Discussion Paper Series in Economics 08/07, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  9. Alejandro Esteller & Albert Solé, 2001. "Tax Setting in a Federal System: The Case of Personal Income Taxation in Canada," Working Papers 2001/9, Institut d'Economia de Barcelona (IEB).
  10. Janeba, Eckhard & Peters, Wolfgang, 1999. "Tax Evasion, Tax Competition and the Gains from Nondiscrimination: The Case of Interest Taxation in Europe," Economic Journal, Royal Economic Society, vol. 109(452), pages 93-101, January.
  11. JUSTMAN , Moshe & THISSE, Jacques-François, . "Local public funding of higher education when skilled labor is imperfectly mobile," CORE Discussion Papers RP 1460, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Haupt, Alexander & Peters, Wolfgang, 2005. "Restricting preferential tax regimes to avoid harmful tax competition," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 493-507, September.
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