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The supply of education quality in a spatial model with asymmetric moving costs

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  • Ordine, Patrizia
  • Rose, Giuseppe

Abstract

The paper analyses the characteristics of the supply of higher education in different geographical macroareas using a strategic interaction framework. It focuses on universities operating in centralised funding system that autonomously set the quality of education showing that in equilibrium it is inversely related to students' moving costs across areas. We show that in the presence of asymmetric information about workers' ability and asymmetric costs of moving, the only PBE consistent with forward induction involves that only high ability workers acquire education and the quality of education is lower in macroareas where the moving costs are higher. Our model predicts that in economies with centralised university funding, educational policies must be regulated according to the specific socioeconomic characteristics of the area. Direct subsidies to universities may be ineffective in improving the quality of education in the less developed areas. When regional disparities are not too big, efficiency gains may be obtained by reducing moving costs.

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  • Ordine, Patrizia & Rose, Giuseppe, 2008. "The supply of education quality in a spatial model with asymmetric moving costs," Research in Economics, Elsevier, vol. 62(4), pages 197-214, December.
    • Handle: RePEc:eee:reecon:v:62:y:2008:i:4:p:197-214
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    1. Kolpin, Van & Stater, Mark, 2024. "The perverse equilibrium effects of state and federal student aid in higher education," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 679-691.
    2. Ordine, Patrizia & Rose, Giuseppe, 2011. "Inefficient self-selection into education and wage inequality," Economics of Education Review, Elsevier, vol. 30(4), pages 582-597, August.
    3. Patrizia Ordine & Giuseppe Rose, 2009. "Overeducation and Instructional Quality: A Theoretical Model and Some Facts," Journal of Human Capital, University of Chicago Press, vol. 3(1), pages 73-105.
    4. Francesca Giambona & Mariano Porcu & Isabella Sulis, 2017. "Students Mobility: Assessing the Determinants of Attractiveness Across Competing Territorial Areas," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(3), pages 1105-1132, September.
    5. Giuseppe Rose, 2009. "Higher education reforms and signaling equilibria," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(2), pages 75-90.

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