Changes in higher education funding: performance-based funding in the US and Europe

In this chapter, we describe and discuss the most significant trends in higher education (HE) funding of the last few decades, with a specific focus on the introduction of performance-based funding (PBF) in research and education in the European and United States contexts. As a first step, we review the practical motivations and theoretical rationale for the emergence of a ‘new funding climate’ in HE, specifically the rise of managerialism and academic capitalism as a global template and, as for Europe, the spread of policies inspired by the new public management. As a second step, we present some empirical evidence on the prevalence of the PBF in the European and the US context, highlighting the differences between the two regional systems. Finally, we conclude by discussing the available evidence on the impact of changing funding structures in terms of scientific performance and academic work, as well as access to and outcomes in HE.