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The Political Economics of Higher-Education Finance for Mobile Individuals

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  • Rainald Borck
  • Silke Uebelmesser
  • Martin Wimbersky

Abstract

We study voting over higher-education finance in an economy with two regions and two separated labor markets. Households differ in their financial endowment and their children's ability. Nonstudents are immobile. Students decide where to study; they return home after graduation with exogenous probability. The voters of the two regions decide on whether to subsidize higher-education costs or to rely on tuition fees only. We find that in equilibrium, in both regions a majority votes for subsidies when the return probability is sufficiently small. When that probability is large, both regions opt for full tuition finance.

Suggested Citation

  • 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.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201503)71:1_82:tpeohf_2.0.tx_2-p
    DOI: 10.1628/001522108X14206439673215
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    Cited by:

    1. Lewis Evans & Neil Quigley, 2013. "Intergenerational Contracts and Time Consistency: Implications for Policy Settings and Governance in the Social Welfare System," Treasury Working Paper Series 13/25, New Zealand Treasury.

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    More about this item

    Keywords

    voting; higher education; financing scheme; mobility;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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