Working Paper: NBER ID: w25945
Authors: John Bound; Breno Braga; Gaurav Khanna; Sarah Turner
Abstract: Over the past few decades, public universities have faced significant declines in state funding per student. We investigate whether these declines affected the educational and research outcomes of these schools. We present evidence that declining funding induced public universities to shift toward tuition as their primary source of revenue. Selective research universities enrolled more out-of-state and international students who pay full fare and increased in-state tuitions, moderating impacts on expenditures. Public universities outside the research sector had fewer options to replace stagnating state appropriations, requiring diminished expenditures and increased in-state tuitions. The evidence we present suggests that the cuts negatively affected degree attainment at the undergraduate and graduate levels. While the evidence on research is mixed, there are indications that the impact of spending declines on research outcomes may become evident over a longer time period
Keywords: public universities; state funding; educational outcomes; research outcomes; tuition
JEL Codes: I25; J24; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Declining state funding (H79) | Shift towards tuition as primary revenue source (I23) |
| Shift towards tuition as primary revenue source (I23) | Increased in-state tuition (H79) |
| Declining state funding (H79) | Enrollment of more out-of-state and international students (I23) |
| Declining state funding (H79) | Negative impact on degree attainment (I24) |
| Declining state funding (H79) | Reduced expenditures at non-research universities (I23) |
| Declining state funding (H79) | Increased tuition at non-research universities (I23) |