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The Political Economics of Higher Education Finance for Mobile Individuals

Author

Listed:
  • Rainald Borck
  • Silke Uebelmesser
  • Martin Wimbersky

Abstract

We study voting over higher education finance in an economy with two regions and two separated labor markets. Households differ in their financial endowment and their children’s ability. Non-students are immobile. Students decide where to study; they return home after graduation with exogenous probability. The voters of the two regions decide on whether to subsidize higher education costs or whether to rely on tuition fees only. We find that in equilibrium, in both regions a majority votes for subsidies when the return probability is sufficiently small. When that probability is large, both regions opt for full tuition finance. Interestingly, the higher the return probability, the smaller are the equilibrium subsidy rates, but the larger are the numbers of exchange students.

Suggested Citation

  • Rainald Borck & Silke Uebelmesser & Martin Wimbersky, 2012. "The Political Economics of Higher Education Finance for Mobile Individuals," CESifo Working Paper Series 3877, CESifo.
    • Handle: RePEc:ces:ceswps:_3877
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    References listed on IDEAS

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    Cited by:

    1. Lewis Evans & Neil Quigley, 2013. "Intergenerational Contracts and Time Consistency: Implications for Policy Settings and Governance in the Social Welfare System," Treasury Working Paper Series 13/25, New Zealand Treasury.

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    More about this item

    Keywords

    voting; higher education; financing scheme; mobility;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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