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Education premium and the compound impact of universities on their regional economy

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  • Janzen, Katrin
  • Panitz, Robert
  • Glückler, Johannes

Abstract

Although the positive impact of higher education on regional economies is widely recognized, empirical assessment of the magnitude of its periodic financial impact remains a puzzle. Conventional impact studies have focused on the regional effects of periodic university spending, neglecting the core functions of higher education institutions. To overcome these shortcomings, we develop the concept of a differential regional education premium and implement it in an extended regional multiplier model. The new model integrates university expenditures and education into a compound effect on regional gross value added. Empirically, we find that the education premium increases the traditional effects of state universities in Baden-Württemberg by 68 percent. Generally, the model can be applied to other regions internationally by adapting to regional factors, such as graduate retention, tuition fees, wage levels and occupational qualifications in regional labor markets.

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  • Janzen, Katrin & Panitz, Robert & Glückler, Johannes, 2022. "Education premium and the compound impact of universities on their regional economy," Research Policy, Elsevier, vol. 51(1).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:1:s0048733321001980
    DOI: 10.1016/j.respol.2021.104402
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    More about this item

    Keywords

    Education premium; Regional multiplier analysis; Regional development; Universities; Baden-Württemberg;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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