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Local public funding of higher education when skilled labor is mobile

Listed author(s):
  • JUSTMAN, Moshe

    (Department of Economics and Monaster Center for Economic Research Ben Gurion University of the Negev Beer Sheva, Israel)

  • THISSE, Jacques-Francois


    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Inter-jurisdictional labor mobility when public funding of higher education is sub-federal leads to a disparity between the centralized output-maximizing allocation of resources to education and decentralized equilibria. We show that when local governments choose their level of spending on higher education at a Nash equilibrium, the size and direction of this disparity depend strongly on the political balance of forces at the sub-federal level. The more common case of under-investment can be alleviated through inter-jurisdictional subsidies of local education expenditures based on net migration flows.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997024.

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Date of creation: 01 Apr 1997
Handle: RePEc:cor:louvco:1997024
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