The University and the Prince: Public funds shaping university trajectories

Andrea Borsato, Valentina Erasmo and André Lorentz

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: We develop an evolutionary model to analyse the role of policymaker’s preferences about the amount and the direction of funding in determining the trajectories of universities. We draw a parallel between the research and the teaching environments, and the Schumpeter Mark I and Schumpeter Mark II innovative patterns, respectively. We obtain that shifting the priority from pure to utilitarian knowledge, and vice-versa, makes production and employment dynamics follow an inverted-U shape. Likewise, the complementarity between teaching and research typical of Humboldt-like organisations allows the system to experience the best performance when preferences are neither too research- nor too teaching-oriented. Moreover, a generalised increase in funds is not effective if the distribution mechanisms are untouched and prioritise university reputation. Finally, a Baumol’s cost disease arises when the scientists wage rate is centralised at system level as in most European economies.

Keywords: university trajectories; government funding policy; third mission. (search for similar items in EconPapers)
JEL-codes: I23 L16 O30 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2024-51

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