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Title

The differential effects of competitive funding on the production frontier and the efficiency of universities

AuthorsBolli, Thomas; Olivares, Maria; Bonaccorsi, Andrea; Daraio, Cinzia; García Aracil, Adela ; Lepori, Benedetto
KeywordsThird-party funding
Stochastic frontier analysis
Efficiency
Production frontier
University
Issue Date2016
PublisherElsevier
CitationEconomics of Education Review 52: 91-104 (2016)
AbstractEuropean governments increasingly employ competitive university funding to improve performance in higher education. The framework that is developed in this paper suggests a donor-specific trade-off between fostering best performing universities and increasing university efficiency when introducing competitive funding in the university sector. We test this assertion based on a university-level panel dataset across eight European countries from 1994–2006. Estimating a simultaneous two-stage Stochastic Frontier Approach, we find that international public funds decrease the productivity of the best performing universities, which suggests a non-negligible effect because of the administrative burden induced by competitive funding. However, the competition for international public funds also disciplines universities as evidenced by a positive impact on efficiency. Conversely, tuition fees enhance the productivity of the best performing universities but increase the spread of universities with lower productivity, which suggests a strong sorting effect.
URIhttp://hdl.handle.net/10261/161591
Identifiersdoi: 10.1016/j.econedurev.2016.01.007
issn: 0272-7757
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