IDEAS home Printed from https://ideas.repec.org/p/zbw/rwirep/457.html
   My bibliography  Save this paper

Does it Pay Off to Incentivize Universities? – Performance Funding in the German Higher Education System

Author

Listed:
  • Burgard, Claudia
  • Grave, Barbara S.

Abstract

This paper analyzes the effect of the introduction of performance-related funding in the German university sector. Starting in the 1990‘s, the federal states of Germany introduced incentive-based funding systems in order to increase universities‘ performance and efficiency. We estimate the effects of this reform on four common outcome indicators of the funding models: The number of students and graduates, which are supposed to measure teaching performance, and the number of PhD graduates and the amount of third-party funds, which quantify research output. Using a difference-in-differences estimator, our results suggest that for increasing the outcomes in teaching, a weak incentive is sufficient while the research outputs are only affected if the incentive is strong enough. We further identify different responses by university types, which shows that the results are mainly driven by technical colleges. According to our findings, it is crucial to design the funding models carefully to provide the “right” incentives and hence to achieve the underlying goal of the reform.

Suggested Citation

  • Burgard, Claudia & Grave, Barbara S., 2013. "Does it Pay Off to Incentivize Universities? – Performance Funding in the German Higher Education System," Ruhr Economic Papers 457, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:457
    DOI: 10.4419/86788516
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/88754/1/774660589.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.4419/86788516?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Martins, Pedro S., 2009. "Individual Teacher Incentives, Student Achievement and Grade Inflation," IZA Discussion Papers 4051, Institute of Labor Economics (IZA).
    2. Atkinson, Adele & Burgess, Simon & Croxson, Bronwyn & Gregg, Paul & Propper, Carol & Slater, Helen & Wilson, Deborah, 2009. "Evaluating the impact of performance-related pay for teachers in England," Labour Economics, Elsevier, vol. 16(3), pages 251-261, June.
    3. Simon Burgess & Carol Propper & Helen Slater & Deborah Wilson, 2005. "Who wins and who loses from school accountability? The distribution of educational gain in English secondary schools," The Centre for Market and Public Organisation 05/128, The Centre for Market and Public Organisation, University of Bristol, UK.
    4. Reback, Randall, 2008. "Teaching to the rating: School accountability and the distribution of student achievement," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1394-1415, June.
    5. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-660, November.
    6. Jacob, Brian A., 2005. "Accountability, incentives and behavior: the impact of high-stakes testing in the Chicago Public Schools," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 761-796, June.
    7. Bauer, Thomas K. & Grave, Barbara S., 2011. "Performance-related Funding of Universities: Does More Competition Lead to Grade Inflation?," IZA Discussion Papers 6073, Institute of Labor Economics (IZA).
    8. Kingdon, Geeta Gandhi & Teal, Francis, 2007. "Does performance related pay for teachers improve student performance? Some evidence from India," Economics of Education Review, Elsevier, vol. 26(4), pages 473-486, August.
    9. repec:zbw:rwirep:0288 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Timo Mitze & Claudia Burgard & Bjoern Alecke, 2013. "The Effect of Tuition Fees on Student Enrollment and Location Choice: Interregional Migration, Border Effects and Gender Differences," ERSA conference papers ersa13p883, European Regional Science Association.
    2. Björn Alecke & Claudia Burgard & Timo Mitze, 2013. "The Effect of Tuition Fees on Student Enrollment and Location Choice – Interregional Migration, Border Effects and Gender Differences," Ruhr Economic Papers 0404, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. repec:zbw:rwirep:0404 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:rwirep:0457 is not listed on IDEAS
    2. Claudia Burgard & Barbara S. Grave, 2013. "Does it Pay Off to Incentivize Universities? – Performance Funding in the German Higher Education System Abstract: This paper analyzes the effect of the introduction of performance-related funding in ," Ruhr Economic Papers 0457, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Bauer, Thomas K. & Grave, Barbara S., 2011. "Performance-related Funding of Universities: Does More Competition Lead to Grade Inflation?," IZA Discussion Papers 6073, Institute of Labor Economics (IZA).
    4. Thomas K. Bauer & Barbara S. Grave, 2011. "Performance-related Funding of Universities – Does more Competition Lead to Grade Inflation?," Ruhr Economic Papers 0288, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. repec:zbw:rwirep:0288 is not listed on IDEAS
    6. Richardson, J.T., 2015. "Accountability incentives and academic achievement: Distributional impacts of accountability when standards are set low," Economics of Education Review, Elsevier, vol. 44(C), pages 1-16.
    7. Erwin Ooghe & Erik Schokkaert, 2016. "School accountability: can we reward schools and avoid pupil selection?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(2), pages 359-387, February.
    8. Ludger Wößmann, 2006. "Bildungspolitische Lehren aus den internationalen Schülertests: Wettbewerb, Autonomie und externe Leistungsüberprüfung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(3), pages 417-444, August.
    9. Feng, Li & Figlio, David & Sass, Tim, 2018. "School accountability and teacher mobility," Journal of Urban Economics, Elsevier, vol. 103(C), pages 1-17.
    10. Krieg, John M., 2011. "Which students are left behind? The racial impacts of the No Child Left Behind Act," Economics of Education Review, Elsevier, vol. 30(4), pages 654-664, August.
    11. Derek Neal, 2011. "The Design of Performance Pay in Education," NBER Working Papers 16710, National Bureau of Economic Research, Inc.
    12. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    13. Ludger Wößmann, 2008. "Efficiency and equity of European education and training policies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(2), pages 199-230, April.
    14. Allen, Rebecca & Burgess, Simon, 2013. "Evaluating the provision of school performance information for school choice," Economics of Education Review, Elsevier, vol. 34(C), pages 175-190.
    15. Figlio, D. & Karbownik, K. & Salvanes, K.G., 2016. "Education Research and Administrative Data," Handbook of the Economics of Education,, Elsevier.
    16. Derek Neal & Diane Whitmore Schanzenbach, 2010. "Left Behind by Design: Proficiency Counts and Test-Based Accountability," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 263-283, May.
    17. Roel Elk & Suzanne Kok, 2016. "The Impact of a Comprehensive School Reform Policy for Weak Schools on Educational Achievement; Results of the First 4 years," De Economist, Springer, vol. 164(4), pages 445-476, December.
    18. Roland G. Fryer, Jr, 2017. "Management and Student Achievement: Evidence from a Randomized Field Experiment," NBER Working Papers 23437, National Bureau of Economic Research, Inc.
    19. Haelermans, Carla & De Witte, Kristof, 2012. "The role of innovations in secondary school performance – Evidence from a conditional efficiency model," European Journal of Operational Research, Elsevier, vol. 223(2), pages 541-549.
    20. Silva, Olmo, 2009. "Some Remarks on the Effectiveness of Primary Education Interventions," IZA Policy Papers 5, Institute of Labor Economics (IZA).
    21. Ehlers, Tim & Schwager, Robert, 2012. "Honest Grading, Grade Inflation and Reputation," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62051, Verein für Socialpolitik / German Economic Association.
    22. Hemelt, Steven W., 2011. "Performance effects of failure to make Adequate Yearly Progress (AYP): Evidence from a regression discontinuity framework," Economics of Education Review, Elsevier, vol. 30(4), pages 702-723, August.

    More about this item

    Keywords

    higher education funding; financial incentives; policy evaluation; difference-indifferences;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:rwirep:457. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/rwiesde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.