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The Economic Impact of Colleges and Universities

Author

Listed:
  • John J. Siegfried

    () (Department of Economics, Vanderbilt University and AEA)

  • Allen R. Sanderson

    () (Department of Economics, University of Chicago)

  • Peter McHenry

    () (Department of Economics, Yale University)

Abstract

This essay describes methodological approaches and pitfalls common to studies of the economic impact of colleges and universities. Such studies often claim local benefits that imply annualized rates of return on local investment exceeding 100 percent. We address problems in these studies pertaining to the specification of the counterfactual, the definition of the local area, the identification of "new" expenditures, the tendency to double count economic impacts, the role of local taxes, and the omission of local spillover benefits from enhanced human capital created by higher education, and offer several suggestions for improvement. If these economic impact studies were conducted at the level of accuracy most institutions require of faculty research, their claims of local economic benefits would not be so preposterous, and, as a result, trust in and respect for higher education officials would be enhanced.

Suggested Citation

  • John J. Siegfried & Allen R. Sanderson & Peter McHenry, 2006. "The Economic Impact of Colleges and Universities," Vanderbilt University Department of Economics Working Papers 0612, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0612
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    References listed on IDEAS

    as
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    Cited by:

    1. Blomquist Glenn C. & Troske Kenneth R. & Coomes Paul A. & Jepsen Christopher & Koford Brandon C., 2014. "Estimating the social value of higher education: willingness to pay for community and technical colleges," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(1), pages 1-39, January.
    2. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," Working Papers 1022, University of Strathclyde Business School, Department of Economics.
    3. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Northern Irish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," Working Papers 1025, University of Strathclyde Business School, Department of Economics.
    4. Timothy J. Bartik & George Erickcek, 2007. "Higher Education, the Health Care Industry, and Metropolitan Regional Economic Development: What Can “Eds & Meds” Do for the Economic Fortunes of a Metro Area’s Residents?," Upjohn Working Papers and Journal Articles 08-140, W.E. Upjohn Institute for Employment Research.
    5. Charles Scott & Nancy Williams & Frederick Derrick, 2015. "Public State Subsidy of Private Higher Ed Institutions: Does It Pay for Itself in Maryland?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(3), pages 337-348, September.
    6. Kristinn Hermannsson & Katerina Lisenkova & Peter G. McGregor & J. Kim Swales, 2014. "'Policy Scepticism' and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 400-417, February.
    7. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution," Working Papers 1015, University of Strathclyde Business School, Department of Economics.
    8. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "“Policy Scepticism†and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure," Working Papers 1029, University of Strathclyde Business School, Department of Economics.
    9. Balazs Kotosz, 2016. "University impact evaluation: Counterfactual methods," ERSA conference papers ersa16p735, European Regional Science Association.
    10. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure," SIRE Discussion Papers 2010-97, Scottish Institute for Research in Economics (SIRE).
    11. Matthew Rousu & Dave Ramsaran & Dylan Furlano, 2015. "Guidelines for Conducting Economic Impact Studies on Fracking," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(2), pages 213-225, May.
    12. Rebecca Bess & Zoë O. Ambargis, 2011. "Input-Output Models for Impact Analysis:Suggestions for Practitioners Using RIMS II Multipliers," BEA Working Papers 0081, Bureau of Economic Analysis.
    13. José António Pacheco Sequeira & Aurora A. C. Teixeira, 2011. "Assessing the influence and impact of R&D institutions by mapping international scientific networks: the case of INESC Porto," Economics and Management Research Projects: An International Journal, Open Access International Journals, vol. 1(1), pages 8-19, February.
    14. Kotosz, Balázs & Lukovics, Miklós & Zuti, Bence & Molnár, Gabriella, 2016. "Egyetemi funkciók és helyi gazdasági hatások: módszertani problémák és lehetséges megoldások
      [University Functions and Local Economic Effects: Methodological Problems and Possible Solutions]
      ," MPRA Paper 78797, University Library of Munich, Germany, revised 2016.
    15. Scaringella, Laurent & Chanaron, Jean-Jacques, 2016. "Grenoble–GIANT Territorial Innovation Models: Are investments in research infrastructures worthwhile?," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 92-101.
    16. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of Northern Irish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," SIRE Discussion Papers 2010-78, Scottish Institute for Research in Economics (SIRE).
    17. repec:kap:iaecre:v:21:y:2015:i:2:p:213-225 is not listed on IDEAS
    18. Zoë O. Ambargis & Thomas McComb & Carol A. Robbins, 2011. "Estimating the Local Economic Impacts of University Activity Using a Bill of Goods Approach," BEA Working Papers 0074, Bureau of Economic Analysis.
    19. Eduardo Ferreira Vinhais, Henrique & Guilhoto, Joaquim José Martins, 2012. "Economic impact of the expansion of federal universities in Brazil," MPRA Paper 53998, University Library of Munich, Germany.
    20. Balazs Kotosz & Marie-France Gaunard-Anderson & Miklos Lukovics, 2015. "International Inequalities in The Local Economic Impact of Universities: The Case of Hungary and France," ERSA conference papers ersa15p777, European Regional Science Association.
    21. Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," SIRE Discussion Papers 2010-72, Scottish Institute for Research in Economics (SIRE).
    22. Lazarov, Darko & Kocovski, Mitko, 2016. "Empirical Estimation Of The Multiplicative Effects Of Steel Industry In Macedonia By Using Input-Output Model," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 7(1), pages 25-35.
    23. Bernard F. Lentz & David N. Laband, 2008. "The Impact of College Athletics on Employment in the Restaurant and Accommodations Industries," Working Papers 0803, International Association of Sports Economists;North American Association of Sports Economists.
    24. Jose M. Pastor & Juan Fernández de Guevara & Francisco Pérez, 2010. "Measuring the local economic impact of universities: an approach that considers uncertainty," Investigaciones de Economía de la Educación volume 5,in: María Jesús Mancebón-Torrubia & Domingo P. Ximénez-de-Embún & José María Gómez-Sancho & Gregorio Gim (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 54, pages 1061-1090 Asociación de Economía de la Educación.
    25. John KAGOCHI & Mostafa MALKI & David SUMMERS, 2015. "The Economic Contributions Of Higher Institutions Of Learning To Regional Communities: The Case Of University Of Houston-Victoria," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 15(1), pages 25-34.

    More about this item

    Keywords

    Colleges; universities; local economic impact; economic impact study;

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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