Student and Worker Mobility under University and Government Competition

Matthieu Delpierre and Bertrand Verheyden

No 3415, CESifo Working Paper Series from CESifo

Abstract: We provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a free-rider effect for governments, who are not willing to subsidize the education of agents who will work abroad. At equilibrium, the free-rider effect always dominates the competition effect, resulting in underinvestment in human capital and overinvestment in research. This inefficiency can be corrected if a transnational transfer for mobile students is implemented. With endogenous income taxation, we show that the strength of fiscal competition increases with human capital production. Consequently, supranational policies aimed at promoting teaching quality reduce tax revenues at the expense of research.

Keywords: student mobility; worker mobility; university competition; government competition (search for similar items in EconPapers)
JEL-codes: H77 I22 I23 I28 (search for similar items in EconPapers)
Date: 2011
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Journal Article: Student and worker mobility under university and government competition (2014)
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