The Provision of Higher Education in a Global World - Analysis and Policy Implications
Mobility is a driving force in the labor market. It is especially crucial as higher education is concerned as it enlarges the opportunities of students and graduates or skilled workers, respectively, and affects the returns to their investment in education. Mobile students and graduates react to the institutional framework and on their turn induce changes in governmental policies as competition between educational institutions and countries becomes more intense. We are here interested in how governmental decisions about the financial regime and the quality level of higher education interact with individual incentives to invest in higher education in closed and in open economies. This question is especially important in the European Union. The Bologna Process, which was launched in 1999, precisely aims at removing the obstacles to mobility for students by establishing the so-called European Higher Education Area by the year 2010. These measures - especially those that increase transparency and comparability of different degree programmes - should lower migration costs. With equal conditions for access - following the non-discrimination principle that holds for EU-citizens - increased mobility is supposed to lead to more competition in terms of quality among different institutions of higher education. But the European Higher Education Area also creates incentives for governments to free-ride on other countries and regions. Free-riding should be especially strong if students are less mobile than skilled workers and if most of those who study abroad return to their home country after graduation. This shows how important it is for an evaluation of the Bologna Process to study different mobility scenarios. Two main questions arise. What is the rationale to increase student mobility? What will be the impact on the financing of higher education and its quality level? Our aim is to build a simple model to address these questions and to derive policy implications as to the optimal financial regime and quality level of higher education in the presence of migration opportunities.
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