Incentive effects in higher education: an improved funding model for Universities

Peter Ainsworth (Lead / Corresponding author), Tom McKenzie, Al Stroyny

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    3 Citations (Scopus)
    280 Downloads (Pure)


    This paper examines the incentive effects of risk-sharing between student and University in the English system. The “Graduate Premium” has been widely reported and has been used to justify rising attendance at University and increased individual and/or governmental expenditure on tertiary education. But this premium is simply the mean of a wide distribution, varying, inter alia, by subject, institution, year of graduation and individual. We assume that Universities exist in a state of monopolistic competition and are subject to a budget constraint and find that a funding model that incorporates risk-sharing improves the efficiency of educational delivery while maintaining subject diversity and access.
    Original languageEnglish
    Pages (from-to)239-257
    JournalEconomic Affairs
    Issue number3
    Publication statusPublished - 21 Oct 2016


    • graduate premium
    • higher education policy
    • risk-sharing
    • student finance
    • universities


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