The expenditure impacts of individual higher education institutions and their students on the Scottish economy under a regional government budget constraint: homogeneity or heterogeneity?

Kristinn Hermannsson, Katerina Lisenkova, Peter McGregor, John Swales

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

Comparing each of the twenty Higher Education Institutions (HEIs) in Scotland as
separate sectors in an Input-Output table suggests their expenditure patterns are
homogenous and that the apparent heterogeneity of their impacts is primarily driven by scale. However, a disaggregation of their income by source reveals a disparity in their dependence upon funding from the devolved Scottish Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Scottish Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Scottish economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic as we do not know whether public and external incomes are complements or substitutions (and indeed this may vary between individual HEIs).
LanguageEnglish
Pages710 – 727
Number of pages18
JournalEnvironment and Planning A
Volume45
Issue number3
DOIs
Publication statusPublished - 2013

Fingerprint

higher education
homogeneity
expenditure
budget
expenditures
student
economy
income
funding
education
disaggregation
multiplier
substitution
Homogeneity
Regional government
Higher education institutions
Budget constraint
Expenditure
Government budget
Income

Keywords

  • higher education institutions
  • input-output
  • Scotland
  • devolution
  • multipliers
  • impact study

Cite this

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abstract = "Comparing each of the twenty Higher Education Institutions (HEIs) in Scotland asseparate sectors in an Input-Output table suggests their expenditure patterns arehomogenous and that the apparent heterogeneity of their impacts is primarily driven by scale. However, a disaggregation of their income by source reveals a disparity in their dependence upon funding from the devolved Scottish Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Scottish Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Scottish economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic as we do not know whether public and external incomes are complements or substitutions (and indeed this may vary between individual HEIs).",
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AB - Comparing each of the twenty Higher Education Institutions (HEIs) in Scotland asseparate sectors in an Input-Output table suggests their expenditure patterns arehomogenous and that the apparent heterogeneity of their impacts is primarily driven by scale. However, a disaggregation of their income by source reveals a disparity in their dependence upon funding from the devolved Scottish Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Scottish Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Scottish economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic as we do not know whether public and external incomes are complements or substitutions (and indeed this may vary between individual HEIs).

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