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Does Private and Cost-Priced Higher Education Produce Poor Quality?


  • Peter Galasi


  • Julia Varga

    () (Department of Human Resources Budapest University of Economics and Public Administration)


Since the beginning of the transition, Hungarian higher education has been undergoing continuous transformation. The number of students in higher education more than doubled, and this was accompanied by the appearance of newly founded church-run and private higher education institutions and newly established cost-priced places. The paper focuses on the potential negative effects private and cost-priced higher education might have on the quality of the education and students by making use of labour market success indicators (wages and labour market status) with the help of multivariate estimation techniques. A unique data set, the Second Fid‚v Survey, is used which provides information about the September 2000 labour market situation of persons graduated from higher education in 1999. The results suggest that education at cost-priced, state funded places and private higher education institutions provides essentially the same level of knowledge or produces the same educational quality as measured by wages. No negative effect has been detected as for the labour market status of exstudents. Students from cost-priced places and private institutions experience the same unemployment probability, whereas the overall employment probability of students graduated from cost-priced places is higher than that of persons studied at state-funded places. One can conclude that although the opportunity of establishing more and more cost-priced places might have been advantageous for higher education institutions so as to increase their revenues, they have shown some selfrestraint in this respect, and there is no sign that the increase in costpriced places has led to lower quality workers.

Suggested Citation

  • Peter Galasi & Julia Varga, 2002. "Does Private and Cost-Priced Higher Education Produce Poor Quality?," Budapest Working Papers on the Labour Market 0201, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  • Handle: RePEc:has:bworkp:0201

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    References listed on IDEAS

    1. Light, Audrey, 2001. "In-School Work Experience and the Returns to Schooling," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 65-93, January.
    2. Brunello, Giorgio & Miniaci, Raffaele, 1999. "The economic returns to schooling for Italian men. An evaluation based on instrumental variables1," Labour Economics, Elsevier, vol. 6(4), pages 509-519, November.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. Bedi, Arjun S. & Gaston, Noel, 1999. "Using variation in schooling availability to estimate educational returns for Honduras," Economics of Education Review, Elsevier, vol. 18(1), pages 107-116, February.
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    Cited by:

    1. Annamária INZELT, 2008. "Strengthen And Upgrade Regional Capabilities (Regional University Knowledge Centre Programme In Hungary)," Romanian Journal of Economics, Institute of National Economy, vol. 26(1(35)), pages 133-154, June.
    2. Peter Galasi, 2003. "Estimating wage equations for Hungarian higher-education graduates," Budapest Working Papers on the Labour Market 0304, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    3. Karoly Fazekas & Gabor Kezdi (ed.), 2007. "The Hungarian Labour Market 2007," The Hungarian Labour Market Yearbooks, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, number 2007, December.

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