Escaping Mass Education – Why Harvard Pays

Andreas Bergh () and Günther Fink

No 2005:2, Working Papers from Lund University, Department of Economics

Abstract: Private universities, as opposed to publicly financed ones, are dominant in some countries and almost non-existent in others. We develop a dynamic model to demonstrate that private providers emerge as soon as they can profitably sell an elite signal to the most highly talented. As private providers engage in cream skimming, the returns to publicly provided education decreases, but the average return to higher education increases because of the signaling benefit created. We use numerical simulations to demonstrate the dynamic implications of our model, and provide some basic empirical evidence in support of the theory presented

Keywords: Higher education; tertiary education; Signaling (search for similar items in EconPapers)
JEL-codes: H52 I22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-edu, nep-lab and nep-pbe
Date: 2005-01-11
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:lunewp:2005_002

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