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Quality of Education and the Number of Students: A General-Equilibrium Analysis

Author

Listed:
  • Gabrielle Demange

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Robert Fenge

    (University of Rostock)

  • Silke Uebelmesser

    (CESifo - CESifo, University of Jena - Friedrich-Schiller-Universität = Friedrich Schiller University Jena [Jena, Germany])

Abstract

For a closed economy, we analyze the relation between the quality of higher education and the number of students. Within a two-period general-equilibrium model, we derive the optimal education policy – i.e., quality of and access restrictions to higher education – with observable ability, and contrast this with a setting where ability is unobservable and financial instruments are restricted to either taxes or fees. If the number of students increases with quality, then there are too many students with tax financing and the quality level is too low – and vice versa with fee financing. Results are not clear-cut when higher quality leads to a lower number of students.

Suggested Citation

  • Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2015. "Quality of Education and the Number of Students: A General-Equilibrium Analysis," PSE-Ecole d'économie de Paris (Postprint) halshs-01203167, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01203167
    DOI: 10.1628/093245615X14285667557478
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    References listed on IDEAS

    as
    1. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
    2. Gabrielle Demange, 2008. "The Provision of Higher Education in a Global World—Analysis and Policy Implications," CESifo Economic Studies, CESifo Group, vol. 54(2), pages 248-276, June.
    3. Andersson, Fredrik & Konrad, Kai A., 2003. "Human capital investment and globalization in extortionary states," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1539-1555, August.
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    More about this item

    Keywords

    higher education; education policy; Student;
    All these keywords.

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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