Escaping Mass Education - Why Harvard Pays

Dept. of Economics, Lund University. Working paper 2005:2

19 Pages Posted: 21 Oct 2009

See all articles by Andreas Bergh

Andreas Bergh

Lund University - Department of Economics; Research Institute of Industrial Economics (IFN)

Guenther Fink

Bocconi University

Date Written: January 11, 2005

Abstract

Private universities, as opposed to publicly financed ones, are dominant in some countries and almost non-existent in others. We develop a dynamic model to demonstrate that private providers emerge as soon as they can profitably sell an elite signal to the most highly talented. As private providers engage in cream skimming, the returns to publicly provided education decreases, but the average return to higher education increases because of the signaling benefit created. We use numerical simulations to demonstrate the dynamic implications of our model, and provide some basic empirical evidence in support of the theory presented

Keywords: Higher education, tertiary education, Signaling

JEL Classification: H52, I22

Suggested Citation

Bergh, Andreas and Fink, Guenther, Escaping Mass Education - Why Harvard Pays (January 11, 2005). Dept. of Economics, Lund University. Working paper 2005:2, Available at SSRN: https://ssrn.com/abstract=889048 or http://dx.doi.org/10.2139/ssrn.889048

Andreas Bergh (Contact Author)

Lund University - Department of Economics ( email )

Research Institute of Industrial Economics (IFN) ( email )

Guenther Fink

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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