‘See you soon?!’ Mobility, competition and free-riding in decentralized higher education financing

Matthias Geissler and Johannes König

Regional Studies, 2021, vol. 55, issue 4, 665-678

Abstract: Highly skilled human capital is usually also highly mobile. Concerns regarding interregional migration revolve around suboptimal public financing of higher education rooted in free-riding behaviour if budget responsibilities are decentralized. This investigation sets out to answer whether cross-state mobility of students in general and individual taste variation in the preference for ‘home’ and ‘university’ states in particular justify concerns about the free-riding behaviour of state governments. We analyse graduates’ location choices when leaving university using a mixed logit model and subsequently relate the revealed taste variation to individual characteristics. The results suggest some attachment to ‘home’ states that justify concerns about potential free-riding. However, substantial taste variation exists and is partly associated with the quality of human capital. State governments free-riding on the investment of others therefore may face a quality trade-off.

Date: 2021
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DOI: 10.1080/00343404.2020.1851023

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