Skip to main content

Advertisement

SpringerLink
Log in

Ethnic Heterogeneity, Group Affinity, and State Higher Education Spending

  • Published:
Research in Higher Education Aims and scope Submit manuscript

Abstract

A rich interdisciplinary literature exists exploring the determinants of state higher education funding policies. However, that work has collectively ignored an important finding from political economy literature: namely, that citizens’ preferences regarding public spending are strongly influenced by the state’s ethnic and racial context. Drawing on a unique panel of state-level data covering the years 1982–2009, we find that states demarcated by increased racial and ethnic diversity and eroding white majorities do tend to spend less on subsidies to public higher education, resulting in decreased state appropriations as well as more tepid support for financial aid programs. Critically, however, we find that the negative effects of increased ethnic and racial fractionalization can be mitigated—and in some circumstances, fully offset—by a high degree of positive social interaction between ethnic and racial groups. These results are discussed within the pragmatic context of continued state emphasis on degree attainment as a mechanism to foster economic growth as well as broader considerations about equality and social justice.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. We use the average of the last five years in order to account for temporal lags in the relationship between our independent variables and state higher education spending and avoid potential endogeneity due to reverse causality. The results we present are robust to alternative lag structures.

  2. We also estimated the models with the dependent variables scaled by state population. The results were not substantively different from those that we present in this paper. The results from this specification are not presented here but are available from the authors upon request.

  3. It is possible that state higher education spending influences the demographic characteristics of a state’s population through its impact on net migration. The channel through which these effects are likely to materialize is the net migration of college students. The extant literature on the relationship between student aid and net student migration suggests that state higher education finance policies significantly influence net student migration (Dynarski 2004; Orsuwon and Heck 2009). The relationship does not appear to be strong enough to substantially influence the overall ethnic composition of states, which is the basis of our variables of interest. We believe that the use of the averages of the independent variables across the previous five years mitigates the potential endogeneity. We also used a specification with simply the fifth-order lags of the independent variables in place of the five-year averages and obtained results similar to those discussed in the text. These results are available upon request.

  4. The 5th percentile state was New Mexico. Arkansas and Tennessee were the 49th and the 51st percentile states, yielding a midpoint of 75.9. The 95th percentile state was West Virginia.

  5. We obtained the segregation data from William H. Frey and the University of Michigan Social Science Data Analysis Network. The authors calculated the segregation index from 1990 and 2000 decennial Census data and from American Community Survey data pooled from 2005 to 2009. We used the estimates derived from ACS data for 2007 and produced estimates for 1991–1999, and for 2001– 2008 with linear interpolation. The authors calculated the indices for white-African -American, white-Hispanic, and white-Asian segregation.

  6. Since the Confederacy and affirmative action ban indicators are time-invariant within states, they are perfectly collinear with the state fixed effects and therefore excluded as constitutive terms in the estimated regressions.

References

  • Alesina, A., Glaeser, E., & Sacerdote, B. (2000). Why doesn’t the U.S. have a European-style welfare system? NBER Working Paper No. 8524. Cambridge, MA: National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w8524. Accessed on August 11, 2013

  • Alesina, A., Baqir, R., & Easterly, W. (1999). Public goods and ethnic divisions. Quarterly Journal of Economics, 114(4), 1243–1284.

    Article  Google Scholar 

  • Alesina, A., & Spaloare, E. (1997). On the number and size of nations. Quarterly Journal of Economics, 112(4), 1027–1056.

    Article  Google Scholar 

  • Archibald, R. B., & Feldman, D. H. (2006). State higher education spending and the tax revolt. The Journal of Higher Education, 4, 618–643.

    Article  Google Scholar 

  • Berry, W. D., Fording, R. C., Hanson, R. L., & Ringquist, E. J. (1998). Measuring citizen and government ideology in the American states, 1960–1993. American Journal of Political Science, 42, 327–348.

    Article  Google Scholar 

  • Boisjoly, J., Duncan, G. J., Kramer, M., Levy, D. M., & Eccles, J. (2006). Empathy or apathy? The impact of diversity. The American Economic Review, 96(5), 1890–1905.

    Article  Google Scholar 

  • Brunner, E. J., & Johnson, E. B. (2016). Intergenerational conflict and the political economy of higher education funding. Journal of Urban Economics, 91, 73–87.

    Article  Google Scholar 

  • Brunner, E. J., Ross, S. L., & Washington, E. (2011). Economics and policy preferences: Causal evidence of the impact of economic conditions on support for redistribution and other ballot proposals. The Review of Economics and Statistics, 93(3), 888–906.

    Article  Google Scholar 

  • Dar, L., & Lee, D.-W. (2014). Partisanship, political polarization, and state higher education budget outcomes. The Journal of Higher Education, 85(4), 469–498.

    Article  Google Scholar 

  • Dee, T.S. (2003). Are there civic returns to higher education? NBER Working Paper w9588. Cambridge, MA: National Bureau of Economic Research.

  • Driscoll, J. C., & Kraay, A. C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics, 80(4), 549–560.

    Article  Google Scholar 

  • Dynarski, S. M. (2004). The new merit aid. In C. M. Hoxby (Ed.), College choices: The economics of where to go, when to go, and how to pay for it (pp. 63–100). Chicago, IL: The University of Chicago Press.

    Chapter  Google Scholar 

  • Dynarski, S. M. (2008). Building the stock of college-educated labor. Journal of Human Resources, 43(3), 576–608.

    Article  Google Scholar 

  • Figlio, D. N., & Fletcher, D. (2012). Suburbanization, demographic change, and the consequences for school finance. Journal of Public Economics, 11–12, 255–268.

    Google Scholar 

  • Fisman, R., Iyengar, S.S., Kamenica, E., &Simonson, I. (2008). Racial preferences in dating. Review of Economic Studies, 75, 117–132.

  • Fletcher, D., & Kenny, L. W. (2008). The influence of the elderly on school spending in a median voter framework. Education Finance and Policy, 3, 283–315.

    Article  Google Scholar 

  • Fong, C. M., & Luttmer, E. F. (2011). Do fairness and race matter in generosity? Evidence from a nationally representative charity experiment. Journal of Public Economics, 95(5), 372–394.

    Article  Google Scholar 

  • Foster, J. M. (2013). Voter ideology, economic factors, and state and local tax progressivity. Public Finance Review, 41(2), 177–202.

    Article  Google Scholar 

  • Greene, W. (2000). Econometric analysis (4th ed.). New York: Prentice-Hall.

    Google Scholar 

  • Heller, D. E. (1999). The effects of tuition and state financial aid on public college enrollment. The Review of Higher Education, 23(1), 65–89.

    Article  Google Scholar 

  • Hero, R. E., & Tolbert, C. J. (1996). A racial/ethnic diversity interpretation of politics and policy in the states of the U.S. American Journal of Political Science, 40(3), 851–871.

    Article  Google Scholar 

  • Hossler, D., Lund, J. P., Ramin, J., Westfall, S., & Irish, S. (1997). State funding for higher education: The Sisyphean task. Journal of Higher Education, 68, 160–190.

  • Jordan, M. P., & Grossman, M. (2016). The Correlates of State Policy Project v.1.0. East Lansing, MI: Institute for Public Policy and Social Research.

    Google Scholar 

  • Kane, T. J., Orszag, P. R., Apostolov, E., Inman, R. P., & Reschovsky, A. (2005). Higher education appropriations and public universities: Role of Medicaid and the business cycle [with comments]. Brookings-Wharton papers on urban affairs, 99–146.

  • Ladd, H. F., & Murray, S. E. (2001). Intergenerational conflict reconsidered: County demographic structure and the demand for public education. Economics of Education Review, 20, 343–357.

    Article  Google Scholar 

  • Lind, J. T. (2007). Fractionalization and the size of government. Journal of Public Economics, 91(1–2), 51–76.

    Article  Google Scholar 

  • Lowry, R. C. (2001). The effects of state political interests and campus outputs on public university revenues. Economics of Education Review, 20(2), 105–119.

    Article  Google Scholar 

  • Luttmer, E. F. P. (2001). Group loyalty and the taste for redistribution. Journal of Political Economy, 109(4), 500–528.

    Article  Google Scholar 

  • McLendon, M. K., Hearn, J. C., & Mohker, C. G. (2009). Partisans, professionals, and power: The role of political factors in state higher education funding. The Journal of Higher Education, 80(6), 686–713.

    Article  Google Scholar 

  • Milligan, K., Moretti, E., & Orsopoulis, P. (2004). Does education improve citizenship? Evidence from the U.S. and the U.K. Journal of Public Economics, 88(9–10), 1667–1695.

  • Nicholson-Crotty, J., & Meier, K. J. (2003). Politics, structure, and public policy: The case of higher education. Educational Policy, 17, 80–97.

    Article  Google Scholar 

  • Orr, L. L. (1976). Income transfers as a public good: An application to AFDC. The American Economic Review, 66(3), 359–371.

    Google Scholar 

  • Orsuwon, M., & Heck, R. H. (2009). Merit-based student aid and freshman interstate college migration: Testing a dynamic model of policy change. Research in Higher Education, 50, 24–51.

    Article  Google Scholar 

  • Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. CESifo Working Papers No. 1233.

  • Poterba, J. M. (1997). Demographic structure and the political economy of public education. Journal of Policy Analysis and Management, 16(1), 48–66.

    Article  Google Scholar 

  • Putnam, R. D. (2007). E pluribus unum: Diversity and community in the twenty-first century: The 2006 Johan Skytte Prize Lecture. Scandinavian Political Studies, 30(2), 137–174.

    Article  Google Scholar 

  • Rizzo, M.J. (2004). The public interest in higher education. CHERI Working Paper #55. Retrieved from http://digitalcommons.ilr.cornell.edu/student/10/. Accessed on December 23, 2015

  • Roch, C. H., & Rushton, M. (2008). Racial context and voting over taxes: Evidence from a referendum in Alabama. Public Finance Review, 36(5), 614–634.

    Article  Google Scholar 

  • Roessner, D., Bond, J., Okubo, S., & Planting, M. (2013). The economic impact of licensed commercialized inventions originating in university research. Research Policy, 42(1), 23–34.

    Article  Google Scholar 

  • Siegfried, J. J., Sanderson, A. R., & McHenry, P. (2007). The economic impact of colleges and universities. Economics of Education Review, 26(5), 546–558.

    Article  Google Scholar 

  • St John, E. P. (1991). The effects of student financial aid on persistence: A sequential analysis. Review of Higher Education, 14(3), 383–406.

    Article  Google Scholar 

  • Stein, R. M., Post, S. S., & Rinden, A. L. (2000). Reconciling context and contact effects on racial attitudes. Political Research Quarterly, 54(3), 571–604.

    Google Scholar 

  • Tandberg, D. A. (2010). Interest groups and governmental institutions: The politics of state funding of public higher education. Educational Policy, 24(5), 735–778.

    Article  Google Scholar 

  • Tandberg, D. A. (2013). The conditioning role of state higher education governance structures. The Journal of Higher Education, 84(4), 506–543.

    Article  Google Scholar 

  • Toutkoushian, R. K., & Shafiq, M. N. (2010). A conceptual analysis of state support for higher education: Appropriations versus need-based financial aid. Research in Higher Education, 51(1), 40–64.

    Article  Google Scholar 

  • Uslaner, E. M. (2011). Trust, diversity, and segregation in the United States and the United Kingdom. Comparative Sociology, 10(2), 221–247.

    Article  Google Scholar 

  • Vigdor, J. L. (2002). Interpreting ethnic fragmentation effects. Economics Letters, 75, 271–276.

    Article  Google Scholar 

  • Weerts, D. J., & Ronca, J. M. (2006). Examining differences in state support for higher education: A comparative study of state appropriations for research I universities. The Journal of Higher Education, 77(6), 935–967.

    Article  Google Scholar 

  • Woodward, D., Figueiredo, O., & Guimaraes, P. (2006). Beyond the Silicon Valley: University R&D and high-technology location. Journal of Urban Economics, 60(1), 15–32.

    Article  Google Scholar 

  • Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data (2nd ed.). Cambridge, MA: MIT Press.

    Google Scholar 

  • Yancey, G. (2002). Who interracially dates: An examination of the characteristics of those who have interracially dated. Journal of Comparative Family Studies, 33, 179–190.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Public Administration and Policy Analysis, Southern Illinois University Edwardsville, Alumni Hall 3128, 125 Peck Service Road, Edwardsville, IL, 62026, USA

    John M. Foster

  2. School of Public Affairs and Administration, University of Kansas, 4060 Wescoe Hall, 1445 Jayhawk Blvd., Lawrence, KS, 66045, USA

    Jacob Fowles

Authors
  1. John M. Foster
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jacob Fowles
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jacob Fowles.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Foster, J.M., Fowles, J. Ethnic Heterogeneity, Group Affinity, and State Higher Education Spending. Res High Educ 59, 1–28 (2018). https://doi.org/10.1007/s11162-017-9453-3

Download citation

  • Received:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11162-017-9453-3

Keywords

Search

Navigation