Students' Mobility and Regional Disparities in Quality and Returns to Education in Italy
The paper analyzes the characteristics of the supply of higher education in different geographical macroareas using a strategic interaction framework. We investigate the issue of educational quality differentials in a centralized funding system. In the presence of moving costs and asymmetric information on individuals ability, we show that only highability students acquire education and the quality of education is lower in macroareas where the moving costs are higher in the only perfect Bayesian equilibrium consistent with forward induction. Our model predicts that direct subsidies to universities may be ineffective in improving the quality of education in the less developed areas. When regional disparities are not too large, efficiency can be increased by subsidizing student mobility.
Volume (Year): 66 (2007)
Issue (Month): 2 (July)
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