In-State versus Out-of State Students: The Divergence of Interest between Public Universities and State Governments
This paper examines the divergence of interest between universities and state governments concerning standards for admitting in-state versus out-of-state students. States have an interest in using universities to attract and retain high ability individuals because they pay higher taxes and contribute more to economic development. In contrast, universities have an interest in their graduates being successful, but little interest in where students come from or where they go after graduation. We develop and test a model that illustrates the divergence of interest between universities and their states. We find that public universities set lower minimum admissions standards for in-state than out-of-state applicants, presumably following their states' preferences, while private universities on average treat both groups equally. However we find that states in fact gain financially when public universities admit additional out-of-state students. This is because attending a public university in a particular state increases marginal students' probability of locating in the state after graduation by the same amount regardless of whether students are from in-state or out-of-state. And because marginal out-of-state students earn more, their expected future state tax payments are higher. We also estimate states' financial gain when public and private universities admit additional in-state versus out-of-state students who have middle and high ability levels. Surprisingly, we find that high ability students tend to be at least as strongly influenced in their adult location choices by where they attend university than are middle and low ability students. Since high ability students also earn more, this suggests that states gain financially when their universities attract high ability students, regardless of whether the students are from in-state or out-of-state or the universities are public or private. Our results suggest a rationale for public support of flagship public universities that can attract high-ability students.
|Date of creation:||Apr 2003|
|Date of revision:|
|Publication status:||published as Groen, Jeffrey A. and Michelle J. White. "In-State Versus Out-of-State Students: The Divergence Of Interest Between Public Universities And State Governments," Journal of Public Economics, 2004, v88(9-10,Aug), 1793-1814.|
|Note:||ED LE PE|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Moretti, Enrico, 2004.
"Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data,"
Journal of Econometrics,
Elsevier, vol. 121(1-2), pages 175-212.
- Enrico Moretti, 2002. "Estimating the Social Return to Higher Education: Evidence From Longitudinal and Repeated Cross-Sectional Data," NBER Working Papers 9108, National Bureau of Economic Research, Inc.
- Wei Fan & Michelle J. White, 2002. "Personal Bankruptcy and the Level of Entrepreneurial Activity," NBER Working Papers 9340, National Bureau of Economic Research, Inc.
- Caroline M. Hoxby, 1997. "How the Changing Market Structure of U.S. Higher Education Explains College Tuition," NBER Working Papers 6323, National Bureau of Economic Research, Inc.
- Stacy Berg Dale & Alan B. Krueger, 2002.
"Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 117(4), pages 1491-1527.
- Stacy Berg Dale & Alan B. Krueger, 1999. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," Mathematica Policy Research Reports 4bafb729911e486baf90b34c9, Mathematica Policy Research.
- Stacy Berg Dale & Alan B. Krueger, 1999. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," NBER Working Papers 7322, National Bureau of Economic Research, Inc.
- Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April.
- Mixon, Franklin Jr & Hsing, Yu, 1994. "The determinants of out-of-state enrollments in higher education: A tobit analysis," Economics of Education Review, Elsevier, vol. 13(4), pages 329-335.
- Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-86, June.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:9603. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.