Fiscal decentralization and the performance of higher education institutions: the case of Europe
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Fiscal decentralization and the performance of higher education institutions: the case of Europe Julien Jacqmin1 · Mathieu Lefebvre2,3
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This paper empirically evaluates the impact of fiscal decentralization on the performance of higher education systems. To test this relationship, we build up a panel dataset composed of European countries. Country-level performance is measured by an indicator using data from the Shanghai ranking. Using a dynamic panel approach, we find that a higher share of government spending coming from decentralized levels of governments leads to an improvement of the performance of research-intensive higher education institutions. We argue that a more decentralized higher education system increases the ability to attract and retain top scholars. Keywords Fiscal decentralization · Ranking · Research · Higher education institutions JEL Classification I23 · I28 · H52 · H75
1 Introduction Since the Lisbon and Europe 2020 strategies, research-intensive higher education institutions are high on the European political agenda. The concomitant emergence of worldwide higher education rankings, like the Shanghai and the Times Higher Education rankings, has shown a decreasing influence of European universities, at the benefit of their American counterparts, and the emergence of top institutions in Asia. In parallel, supranational institutions such as the (World Bank 2000) or the * Mathieu Lefebvre [email protected] Julien Jacqmin julien.jacqmin@neoma‑bs.fr 1
NEOMA Business School, 1 rue du Marechal Juin, 76130 Mont‑Saint‑Aignan, France
2
BETA, University of Strasbourg, 61 avenue de la Forêt Noire, 67085 Strasbourg, France
3
CREPP, University of Liège, Liège, Belgium
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Empirica
OECD have promoted reforms towards a greater decentralization of political powers. The goal of this paper is to study how increasing the extent of fiscal decentralization influences the performance of the higher education sector. From a general point of view, the impact of more decentralization on production efficiency is not clearcut. According to a large part of the literature, a greater level of decentralization is beneficial for government-supported services such as health or education, thanks to the informational advantages of local governments which can provide a better match with citizen’s preferences (Oates 1972). This line of argumentation is deeply rooted in Tieboult’s framework where citizen’s mobility can lead to the desired amount of competition between jurisdictions by voting with their feet (Tiebout 1956). Several mechanisms have been provided to explain this relationship. A first one comes from an improved political accountability (see Seabright 1996 or Persson and Tabellini 2000). Decentralization closes the gap between politicians in office and citizens. The former then have more incentives to act in accordance to the latter due to this greater scrutiny. A second explanation relates to the gr
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