Abstract

http://ssrn.com/abstract=2308267
 


 



The U.S. Market for Higher Education: A General Equilibrium Analysis of State and Private Colleges and Public Funding Policies


Dennis Epple


Carnegie Mellon University; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Richard E. Romano


University of Florida - Warrington College of Business Administration - Department of Economics

Sinan Sarpca


Koc University - Department of Economics

Holger Sieg


University of Pennsylvania - Department of Economics

August 2013

NBER Working Paper No. w19298

Abstract:     
We develop a new general equilibrium model of the market for higher education that captures the coexistence of public and private universities, the large degree of quality differentiation among them, and the tuition and admission policies that emerge from their competition for students. We use the model to examine the consequences of federal and state aid policies. We show that private colleges game the federal financial aid system, strategically increasing tuition to increase student aid, and using the proceeds to spend more on educational resources and to compete for high-ability students. Increases in federal aid have modest effects in increasing college attendance, with nearly half of the increased federal aid offset by reduced institutional aid and increased university educational expenditures. A reduction in state subsidies coupled with increases in tuition at public schools substantially reduces attendance at those universities, with mainly poor students exiting, and with only moderate switching into private colleges.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Number of Pages in PDF File: 42

working papers series


Date posted: August 10, 2013  

Suggested Citation

Epple, Dennis and Romano, Richard E. and Sarpca, Sinan and Sieg, Holger, The U.S. Market for Higher Education: A General Equilibrium Analysis of State and Private Colleges and Public Funding Policies (August 2013). NBER Working Paper No. w19298. Available at SSRN: http://ssrn.com/abstract=2308267

Contact Information

Dennis Epple (Contact Author)
Carnegie Mellon University ( email )
Tepper School of Business
Pittsburgh, PA 15213-3890
United States
412-268-1536 (Phone)
412-268-7357 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
Richard E. Romano
University of Florida - Warrington College of Business Administration - Department of Economics ( email )
Gainesville, FL 32611-7140
United States
(352) 392-4812 (Phone)
HOME PAGE: http://www.cba.ufl.edu/faculty/facultyinfo.asp?WEBID=321
Sinan Sarpca
Koc University - Department of Economics ( email )
Rumeli Feneri Yolu
Sariyer 80910, Istanbul
Turkey
+90 (212) 338 1214 (Phone)
HOME PAGE: http://network.ku.edu.tr/~ssarpca/
Holger Sieg
University of Pennsylvania - Department of Economics ( email )
3718 Locust Walk
Philadelphia, PA 19104
United States
Feedback to SSRN


Paper statistics
Abstract Views: 207
Downloads: 48

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.562 seconds