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Public Funding of Higher Education when Students and Skilled Workers are Mobile

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  • Thomas Lange

Abstract

The interregional mobility of high-skilled workers may induce an underinvestment in local public higher education when subfederal entities independently decide on education expenditures to maximize local output. This well-known result, which is due to a positive interregional spillover of local education policy when some individuals emigrate upon graduation, can reverse once taking student mobility into account. When local education policy attracts foreign students, a negative spillover takes place, and the actual discrepancy between decentralized policy and the global-output-maximizing solution depends on the relative size of the two spillovers. The paper also presents a variant of the model with local governments' objectives resting exclusively upon natives' utility.

Suggested Citation

  • Thomas Lange, 2009. "Public Funding of Higher Education when Students and Skilled Workers are Mobile," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(2), pages 178-199, June.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200906)65:2_178:pfohew_2.0.tx_2-l
    DOI: 10.1628/001522109X466527
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    References listed on IDEAS

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    1. Baruch, Yehuda & Budhwar, Pawan S. & Khatri, Naresh, 2007. "Brain drain: Inclination to stay abroad after studies," Journal of World Business, Elsevier, vol. 42(1), pages 99-112, March.
    2. Elena Del Rey, 2001. "Economic Integration and Public Provision of Education," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(2), pages 203-218, June.
    3. Robin Boadway & Nicolas Marceau & Maurice Marchand, 1996. "Issues in decentralizing the provision of education," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 311-327, July.
    4. Andersson, Fredrik & Konrad, Kai A., 2003. "Human capital investment and globalization in extortionary states," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1539-1555, August.
    5. Jonathan Chaloff & Georges Lemaître, 2009. "Managing Highly-Skilled Labour Migration: A Comparative Analysis of Migration Policies and Challenges in OECD Countries," OECD Social, Employment and Migration Working Papers 79, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Alexander Haupt & Tim Krieger & Thomas Lange, 2011. "Competition for the International Pool of Talent: Education Policy and Student Mobility," Working Papers CIE 35, Paderborn University, CIE Center for International Economics.
    3. Alexander Haupt & Tim Krieger & Thomas Lange, 2016. "Competition for the international pool of talent," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1113-1154, October.
    4. 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.
    5. Delpierre, Matthieu & Verheyden, Bertrand, 2014. "Student and worker mobility under university and government competition," Journal of Public Economics, Elsevier, vol. 110(C), pages 26-41.
    6. Tim Krieger & Thomas Lange, 2010. "Education policy and tax competition with imperfect student and labor mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(6), pages 587-606, December.
    7. Thomas Lange, 2013. "Return migration of foreign students and non-resident tuition fees," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 703-718, April.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. Gabriel Felbermayr & Isabella Reczkowski & Gabriel J. Felbermayr, 2012. "International Student Mobility and High-Skilled Migration: The Evidence," ifo Working Paper Series 132, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    14. 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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    More about this item

    Keywords

    higher education; student mobility; high-skilled labor mobility; local public finance;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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