Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46428
Authors: 
Delpierre, Matthieu
Verheyden, Bertrand
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Economics of Education 3415
Abstract: 
We provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a free-rider effect for governments, who are not willing to subsidize the education of agents who will work abroad. At equilibrium, the free-rider effect always dominates the competition effect, resulting in underinvestment in human capital and overinvestment in research. This inefficiency can be corrected if a transnational transfer for mobile students is implemented. With endogenous income taxation, we show that the strength of fiscal competition increases with human capital production. Consequently, supranational policies aimed at promoting teaching quality reduce tax revenues at the expense of research.
Subjects: 
student mobility
worker mobility
university competition
government competition
JEL: 
H77
I22
I23
I28
Document Type: 
Working Paper

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