Valuing the benefits of the education provided by public universities: A case study of Minnesota

Amy Damon; Paul Glewwe

doi:10.1016/j.econedurev.2011.07.015

Valuing the benefits of the education provided by public universities: A case study of Minnesota

Amy Damon, Paul Glewwe

Applied Economics

Research output: Contribution to journal › Article › peer-review

15 Scopus citations

Abstract

This study estimates the value of the private and public benefits that accrue to Minnesota residents from state government subsidies to higher education. In 2005, the University of Minnesota and the Minnesota State Colleges and Universities system received $832 million from Minnesota's state government to support educational programs. These subsidies allow these institutions to offer lower tuition rates, increasing the number of Minnesotans with bachelor and graduate degrees. We calculate that removing these subsidies would eventually lead to 14,000 fewer graduate degree holders in Minnesota, and reduce those with bachelor's degrees or "some college" by 42,000. The annual economic cost of these subsidies is about $326 million; this is less than annual state appropriations because most of those appropriations are income transfers from taxpayers to students, not an economic cost. We estimate that the annual value of the benefits of these subsidies is between $531 and $786 million ($381 and $570 million) when a 3% (5%) discount rate is used. We also discuss some of the income distribution consequences.

Original language	English (US)
Pages (from-to)	1242-1261
Number of pages	20
Journal	Economics of Education Review
Volume	30
Issue number	6
DOIs	https://doi.org/10.1016/j.econedurev.2011.07.015
State	Published - Dec 2011

Bibliographical note

Funding Information:
The University of Minnesota is a publicly funded, land grant, research university. In the fall of 2006, it had an enrollment of 65,489 students. From the mid 1990s to 2006, undergraduate enrollment increased from about 35,000 to about 40,000, while graduate and professional school enrollment increased at a faster rate, from about 12,000 to about 19,000. Approximately 61% of University of Minnesota alumni of working age in 2005 resided in Minnesota, representing 8.7% of Minnesota's workforce. The University of Minnesota attracts students from other, mostly neighboring, states; 22% of its graduates are from other states. About 37% of these students stay in Minnesota after they graduate.

Copyright:
Copyright 2011 Elsevier B.V., All rights reserved.

Keywords

Cost-benefit analysis
Distributional impacts
Higher education subsidies
Minnesota
Social benefits

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.econedurev.2011.07.015

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abstract = "This study estimates the value of the private and public benefits that accrue to Minnesota residents from state government subsidies to higher education. In 2005, the University of Minnesota and the Minnesota State Colleges and Universities system received $832 million from Minnesota's state government to support educational programs. These subsidies allow these institutions to offer lower tuition rates, increasing the number of Minnesotans with bachelor and graduate degrees. We calculate that removing these subsidies would eventually lead to 14,000 fewer graduate degree holders in Minnesota, and reduce those with bachelor's degrees or {"}some college{"} by 42,000. The annual economic cost of these subsidies is about $326 million; this is less than annual state appropriations because most of those appropriations are income transfers from taxpayers to students, not an economic cost. We estimate that the annual value of the benefits of these subsidies is between $531 and $786 million ($381 and $570 million) when a 3% (5%) discount rate is used. We also discuss some of the income distribution consequences.",

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N2 - This study estimates the value of the private and public benefits that accrue to Minnesota residents from state government subsidies to higher education. In 2005, the University of Minnesota and the Minnesota State Colleges and Universities system received $832 million from Minnesota's state government to support educational programs. These subsidies allow these institutions to offer lower tuition rates, increasing the number of Minnesotans with bachelor and graduate degrees. We calculate that removing these subsidies would eventually lead to 14,000 fewer graduate degree holders in Minnesota, and reduce those with bachelor's degrees or "some college" by 42,000. The annual economic cost of these subsidies is about $326 million; this is less than annual state appropriations because most of those appropriations are income transfers from taxpayers to students, not an economic cost. We estimate that the annual value of the benefits of these subsidies is between $531 and $786 million ($381 and $570 million) when a 3% (5%) discount rate is used. We also discuss some of the income distribution consequences.

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Valuing the benefits of the education provided by public universities: A case study of Minnesota

Abstract

Bibliographical note

Keywords

UN SDGs

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