Fiscal Competition and Higher Education Spending in Germany

Fischer Georg-Benedikt and Wigger Berthold U.
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Fischer Georg-Benedikt: Karlsruhe Institute of Technology,Karlsruhe, Germany
Wigger Berthold U.: Karlsruhe Institute of Technology,Karlsruhe, Germany

German Economic Review, 2016, vol. 17, issue 2, 234-252

Abstract: The present paper studies the determinants of higher education spending by the German federal states with a focus on the interplay between higher education spending of neighboring states. More specifically, the paper asks whether the German federal states free-ride on one another’s higher educational spending or whether they employ higher education spending to attract university graduates. We identify a positive relationship between the states’ higher education spending and conclude that the states compete for graduates rather than free-ride. We also consider the effect of the recent introduction of tuition fees in some, but not all German states. We do not find evidence that tuition fees led to crowding out of public higher education funds.

Keywords: Fiscal competition; higher education spending; tuition fees (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1111/geer.12088

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