Modeling tuition fees in presence of social heterogeneity

David Flacher () and Hugo Harari-Kermadec ()
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David Flacher: CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation) - UP13 - Université Paris 13 - CNRS - Centre National de la Recherche Scientifique
Hugo Harari-Kermadec: SAMM - Statistique, Analyse et Modélisation Multidisciplinaire (SAmos-Marin Mersenne) - UP1 - Université Paris 1 Panthéon-Sorbonne

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Abstract: Tuition fees have been spreading through developed countries in the last decade. Beyond the obvious interest of funding universities, it is advocated that they could serve as a tool to select students. According to some recent models, in presence of asymmetric and imperfect information on the candidates' capacities, tuition should be the only selection device, at the expense of tests. Following Bourdieu's seminal work on higher education, we consider that powerful sociologic mechanisms induce social reproduction. These effects must be taken into account to understand the behaviour of potential students. In particular, candidates from lower social groups may underestimate their capacities. Therefore, we introduce heterogeneity in potential students' private evaluation of their own capacities. As a result, we obtain that tuition fees do not lead to social optimum, because talented member discard themselves. This effect gets only stronger as entrance tests are abandoned. Nevertheless, we do not recommend strong selecting tests, since the same sociologic mechanisms negatively biased the results of applicants from lower social groups.

Date: 2010-07-08
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Published in XIX Meeting of the Economics of Education Association, Jul 2010, Zaragoza, Spain. pp.525-536

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