Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58705 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 6073
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
German universities are regarded as being under-financed, inefficient, and performing below average if compared to universities in other European countries and the US. Starting in the 1990s, several German federal states implemented reforms to improve this situation. An important part of these reforms has been the introduction of indicator-based funding systems. These financing systems aimed at increasing the competition between universities by making their pubic funds dependent on their relative performance concerning different output measures, such as the share of students obtaining a degree or the amount of third party funds. This paper evaluates whether the indicator-based funding created unintended incentives, i.e. whether the reform caused grade inflation. Estimating mean as well as quantile treatment effects, we cannot support the hypothesis that increased competition between universities causes grade inflation.
Subjects: 
grade inflation
higher education funding
university competition
JEL: 
H52
I21
I22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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