The Causal Impact Of Performance-Based Funding On University Performance: Quasi-Experimental Evidence From A Policy In Russian Higher Education

In most countries which experience structural transformation of their higher education system, a crucial goal of policy makers is to tie the amount of university public funding to their performance. This research analyzes the Russian performance-based funding (PBF) reform to provide a quasi-experimental assessment of its effects on Russian universities’ performance. Data comes from the Monitoring for HEIs performance and covers the period between 2014/2015 and 2017/2018. To evaluate the causal effect of the PBF policy on university performance, in a first step we define the treatment and the control groups by distinguishing universities on the basis of the trend in their performance-based allocations. In a second step, we estimated the causal effect of the redistribution of public funds across universities as a result of PBF policy. Results indicate that the performance of universities is actually affected by getting extra funding after the reform, although heterogeneity is at play. The short-run effect is related with the impact on average national exam scores, indicating that the policy forced universities to be more selective.