The Expenditure Impacts of Individual Higher Education Institutions (HEIs) and their Students on the Scottish Economy under Devolution: Homogeneity or Heterogeneity?

Kristinn Hermannsson, Katerina Lisenkova, Peter G McGregor, J Kim Swales

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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).
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Number of pages43
Publication statusPublished - 2010

Publication series

NameDiscussion Papers in Economics
PublisherUniversity of Strathclyde
No.10-16

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Keywords

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

Cite this

Hermannsson, K., Lisenkova, K., McGregor, P. G., & Swales, J. K. (2010). The Expenditure Impacts of Individual Higher Education Institutions (HEIs) and their Students on the Scottish Economy under Devolution: Homogeneity or Heterogeneity? (Discussion Papers in Economics; No. 10-16). Glasgow: University of Strathclyde.