Public Funding of Higher Education when Students and Skilled Workers are Mobile

Thomas Lange

FinanzArchiv: Public Finance Analysis, 2009, vol. 65, issue 2, 178-199

Abstract: The interregional mobility of high-skilled workers may induce an underinvestment in local public higher education when subfederal entities independently decide on education expenditures to maximize local output. This well-known result, which is due to a positive interregional spillover of local education policy when some individuals emigrate upon graduation, can reverse once taking student mobility into account. When local education policy attracts foreign students, a negative spillover takes place, and the actual discrepancy between decentralized policy and the global-output-maximizing solution depends on the relative size of the two spillovers. The paper also presents a variant of the model with local governments' objectives resting exclusively upon natives' utility.

Keywords: higher education; student mobility; high-skilled labor mobility; local public finance (search for similar items in EconPapers)
JEL-codes: H77 I22 J61 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (23)

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DOI: 10.1628/001522109X466527

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