The political economy of higher education admission standards and participation gap

Abstract

We build a political economy model allowing us to shed light on the empirically observed simultaneous increase in university size and participation gap. Parents differ in income and in the ability of their unique child. They vote over the minimum ability level required to attend public universities, which are tuitionfree and financed by proportional income taxation. Parents can invest in private tutoring to help their child pass the admission test. A university participation gap emerges endogenously with richer parents investing more in tutoring. A unique majority voting equilibrium exists, which can be either classical or “ends-gainstthe-middle” (in which case parents of both low- and high-ability children favor a smaller university). Fourfactors increase the university size (larger skill premium enjoyed by university graduates, smaller tutoringcosts, smaller university cost per student, larger minimum ability of students), but only the former two also increase the participation gap. A more unequal parental income distribution also increases the participation gap, but barely affects the university size.

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Replaces

Philippe De Donder, and Francisco Martinez-Mora, “On the Political Economy of University Admission Standards”, TSE Working Paper, n. 15-582, May 2015.

Reference

Philippe De Donder, and Francisco Martinez-Mora, “The political economy of higher education admission standards and participation gap”, Journal of Public Economics, vol. 154, 2017, pp. 1–9.