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.
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Notes
This is likely to be a good proxy of regulatory autonomy as well, in the absence of data on the decentralization of the governmental regulation taking place in the sector. One reason is that most of the public funding granted comes with some strings attached to it that are set by the government granting it.
Table 5 in the appendix presents statistics by country.
For schools ranked after the \(100^{th}\) position of the ranking, schools are lumped in categories, e.g. between 101 and 150. Based on the indicators and their weights used to build up the precise ranking, we retrieve the precise rank of each schools that are ranked.
As a robustness test we also introduce different amount of lags but it does not change our main results. See the robustness section below.
A Hausman test reveals that the results of the fixed-effects approach differ significantly from those of a random-effects approach.
Note that when using spending in \(\%\) of GDP as a dependent variable, the size of our sample increases. Restricting our analysis on the same sample as our main analysis does not impact our result.
A side effect of considering time lags between our explanatory and our dependent variable is that it undermines the presence of reverse causality, another source of endogeneity.
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Jacqmin, J., Lefebvre, M. Fiscal decentralization and the performance of higher education institutions: the case of Europe. Empirica 48, 743–758 (2021). https://doi.org/10.1007/s10663-020-09489-z
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DOI: https://doi.org/10.1007/s10663-020-09489-z