Baumol and Bowen Cost Effects in Research Universities

Robert E. Martin (), Carter Hill and Melissa S. Waters ()

Departmental Working Papers from Department of Economics, Louisiana State University

Abstract: We estimate cost models for both public and private research universities and use partial differentials from these models to estimate different cost effects. The results suggest both Baumol�s cost disease and Bowen�s revenue theory drive cost higher and that Bowen effects are larger than Baumol effects. Tight revenue since 2008 reversed some declines in productivity and accelerated the trend in economizing on the use of tenure track faculty. This behavior under loose and tight revenue constraints is consistent with Bowen�s revenue theory.

Date: 2017-03
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:lsu:lsuwpp:2017-03

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