Performance-related funding of universities: Does more competition lead to grade inflation?

Arbeitspapier

German universities are regarded as being under-financed, inefficient, and performing below average if compared to universities in other European countries and the US. Starting in the 1990s, several German federal states implemented reforms to improve this situation. An important part of these reforms has been the introduction of indicator-based funding systems. These financing systems aimed at increasing the competition between universities by making their pubic funds dependent on their relative performance concerning different output measures, such as the share of students obtaining a degree or the amount of third party funds. This paper evaluates whether the indicator-based funding created unintended incentives, i.e. whether the reform caused grade inflation. Estimating mean as well as quantile treatment effects, we cannot support the hypothesis that increased competition between universities causes grade inflation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6073

Classification and Topics

• Classification: Wirtschaft ; National Government Expenditures and Education ; Analysis of Education ; Educational Finance; Financial Aid
• Subject: grade inflation ; higher education funding ; university competition ; Hochschulfinanzierung ; Bildungsabschluss ; Hochschule ; Wettbewerb ; Schätzung ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bauer, Thomas K. ; Grave, Barbara S.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/58705
• URN: urn:nbn:de:101:1-201111083076
• Last update: 10.03.2025, 11:44 AM CET