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Evaluating Effects of Tuition Fees: Lasso for the Case of Germany

Konstantin G\"orgen and Melanie Schienle

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Abstract: We study the effect of the introduction of university tuition fees on the enrollment behavior of students in Germany. For this, an appropriate Lasso-technique is crucial in order to identify the magnitude and significance of the effect due to potentially many relevant controlling factors and only a short time frame where fees existed. We show that a post-double selection strategy combined with stability selection determines a significant negative impact of fees on student enrollment and identifies relevant variables. This is in contrast to previous empirical studies and a plain linear panel regression which cannot detect any effect of tuition fees in this case. In our study, we explicitly deal with data challenges in the response variable in a transparent way and provide respective robust results. Moreover, we control for spatial cross-effects capturing the heterogeneity in the introduction scheme of fees across federal states ("Bundesl\"ander"), which can set their own educational policy. We also confirm the validity of our Lasso approach in a comprehensive simulation study.

Date: 2019-09
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