Quality of Higher Education and Earnings: Regression Discontinuity Evidence from the French Baccalaureate
An important question in the economics of education literature is whether quality of postsecondary education has a significant impact on students’ future labor market outcomes. Our paper shows that higher quality schooling, defined by the quality of university attended and field of study pursued, can lead to a significant increase in earnings for academically marginal students.
Recent reports suggest that there is a growing wage gap for jobs in the fields of science, technology, engineering and mathematics (STEM). From a policy perspective, these fields are perceived to be the basis for innovation and governments have been increasingly investing in STEM education. For example, the United States’ proposed budget for the fiscal year allocates $2.9 billion for STEM education programs, a rise of 3.7 percent over the previous year.
While there is a positive correlation between STEM education and earnings, the evidence on whether this link is causal is scarce, especially with regards to the magnitude of the returns. Indeed, one could imagine that majoring in a STEM field in college could lead to an increase in earnings. However, it is also likely that the individuals who enroll in these fields are better students with better prospective outcomes regardless of major chosen. As a result, measuring the true returns to STEM education is complex. Continue reading →
Mobility of students and graduates interrelated, a challenge for fiscal policy, especially the public provision and financing of higher education
A discussion of their new book The Mobility of Students and the Highly Skilled:Implications for Education Financing and Economic Policy by Marcel Gérard and Silke Uebelmesser 
Mobility of students in developed countries has dramatically increased over the last fifty years. Students do not necessarily remain in their countries of origin for higher education and work; they might be born in one country, attend university in a second, and find employment in a third. In the book that we have edited, contributors from Europe, North America, and Australia examine evidence of the interrelationship between the mobility of students and graduates, especially researchers; investigate free-riding problems associated with mobility, including the provision and funding of public higher education; and address the effects of education policy on human capital accumulation and economic development, offering recommendations for well-designed policies in the presence of migration of talents.
Since 1994 the total number of overseas students in UK universities has quadrupled. Currently there are 266,000 full-time overseas students studying in the UK. This is excluding the 110,000 students from the remainder of the EU who are counted as Home students for student financing purposes.
The postgraduate sector has seen the strongest growth in overseas students in terms of proportions and absolute numbers. There are now over five times as many overseas taught postgraduates than there were in 1994, increasing from 28,000 then to 140,000 by 20011/12 (Figure 1). They now represent 48% of masters students, and when including non-UK EU students this raises to 60%.
Its easy to see why universities like to recruit overseas students. Their fees are typically higher than domestic students (particularly for undergraduates whose fees are capped in the UK) so they can considerably boost funding at a university. The fees from overseas students now contribute 11.6% of the total income of the higher educational sector. Moreover their higher tuition fees make up 39% of all fee income despite only accounting for 15% of all student places.
A critical policy question therefore is, what impact has this rapid influx of international students had on the number of places available for domestic UK students? Have universities taken on overseas students at the expense of domestic students, or have they used this increased funding to expand the number of places available for domestic UK students?
Until recently, talented people born in one country were educated, worked, retired and died in that same country. For that country, financing higher education, through tuition fees paid by families, foundations or financial institutions providing loans, or through taxes, was an investment generating extra welfare for the local population: larger graduate income meant extra tax revenues, better wealth, improved productivity of both high and low skilled people. These positive externalities justified and even guided an efficient and fair sharing of the cost of studies between tuition fees and tax financed subsidies. That was the old paradigm.
Nowadays the story is different. Talented students are international. Cross border spillovers are at work: the country which hosts them for higher education is neither their place of birth and first education, nor of work after graduation. And the jurisdiction which finances the studies is no longer that which benefits from the enrichment of that human capital. Even more, studying abroad is a driver for subsequently working abroad.
Last year an article in the Guardian newspaper described significant disparities in the success rates of white and non-white applicants to the University of Oxford, even among students who received top grades at A-level. The article reported that, in 2010-11, offer rates were around 1.5 times higher for white applicants than for ethnic minority applicants with the same grades, and up to twice as high in relation to Oxford’s two most oversubscribed subjects, Medicine, and Economics and Management. This pattern was found to hold even for students with 3+ A* grades at A-level. Continue reading →