Student and Worker Mobility Under University and Government Competition
22 Pages Posted: 27 Apr 2011
Date Written: April 27, 2011
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
JEL Classification: H770, I220, I230, I280
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Human Capital Investment and Globalization in Extortionary States
By Fredrik Andersson and Kai A. Konrad
-
Globalization and Human Capital Formation
By Fredrik Andersson and Kai A. Konrad
-
Factor Mobility and Fiscal Policy in the EU: Policy Issues and Analytical Approaches
-
Education, Redistribution, and the Threat of Brain Drain
By Alexander Haupt and Eckhard Janeba
-
Privacy, Time Consistent Optimal Labor Income Taxation and Education Policy
-
Public Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?
-
Mobility and the Role of Education as a Commitment Device
By Claudio Thum and Silke Uebelmesser
-
An Economic Rationale for Public Education: The Value of Commitment