Higher Education Supply, Neighbourhood Effects and Economic Welfare

62 Pages Posted: 21 Feb 2019

See all articles by Elena Cottini

Elena Cottini

Catholic University of the Sacred Heart of Milan; Aarhus University - School of Business and Social Sciences

Paolo Ghinetti

University of Piemonte Orientale - Department of Economics and Business Studies; Catholic University of the Sacred Heart of Milan - Graduate School in Public Economics (DEFAP)

Simone Moriconi

Catholic University of the Sacred Heart of Milan

Date Written: 2019

Abstract

This paper uses our own built historical data for Italy to analyse the effects of the modern supply of higher education institutions on economic welfare, measured in terms of real income per capita. We perform an empirical analysis at the province level implementing a fixed effect instrumental variables estimator for over 150 years. We use as instruments the interaction of the province-level supply of higher education before the Italian political unification with university reforms that occurred in Italian history. We find evidence of displacement forces between institutions in sufficiently close neighbourhoods. We argue that quantifying the cost of such displacement forces is crucial to properly evaluating the welfare effects of higher education institutions. We find that a province exposed to the average supply (measured as the number of local institutions) has a 4:9% higher real income per capita compared to a province with no supply. Once we properly account for the foregone value of displacement forces, we show that economic returns are very localised at the province level.

Keywords: neighbourhood effects, higher education supply, historical data, initial conditions, economic welfare

JEL Classification: I230, I280, N000, R100

Suggested Citation

Cottini, Elena and Ghinetti, Paolo and Moriconi, Simone, Higher Education Supply, Neighbourhood Effects and Economic Welfare (2019). CESifo Working Paper No. 7483, Available at SSRN: https://ssrn.com/abstract=3338838 or http://dx.doi.org/10.2139/ssrn.3338838

Elena Cottini (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Aarhus University - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

Paolo Ghinetti

University of Piemonte Orientale - Department of Economics and Business Studies ( email )

via E. Perrone 18
Novara, Novara 28100
Italy

Catholic University of the Sacred Heart of Milan - Graduate School in Public Economics (DEFAP) ( email )

Italy

Simone Moriconi

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

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