K.U.Leuven, Faculty of Economics and Applied Economics : Department of Economics
CES - Discussion paper series (DPS) 06.10 pages:1-44
We analyze the determinants of participation (whether to study) and schooling (where and what to study) in a public system of higher education, based on a unique dataset of all eligible high school pupils in an essentially closed region (Flanders). We .nd that pupils perceive the available institutions and programs as close substitutes, implying an ambiguous role for travel costs: they hardly aspect the participation decisions, but have a strong impact on the schooling decisions. In addition, high school background plays an important role in both the participation and schooling decisions.
To illustrate how our empirical results can inform the debate on reforming public systems, we assess the effects of tuition fee increases. Uniform cost-based tuition fee increases achieve most of the welfare gains; the additional gains from fee di¤erentiation are relatively unimportant. These welfare gains are quite large if one makes conservative assumptions on the social cost of public funds, and there is a substantial redistribution from students to outsiders.