Too Much to Die, Too Little to Live Unemployment, Higher Education Policies and University Budgets in Germany
Journal of European Public Policy, Vol. 14, No. 4, pp. 631-653, June 2007
34 Pages Posted: 22 Dec 2006 Last revised: 24 Oct 2011
Date Written: December 1, 2006
German educational spending per student has dramatically declined since the early 1970s. In this paper, we develop a theory of fiscal opportunism and argue that state governments exploit higher educational policies as an instrument of active labor market policy. By 'opening' universities to the masses and the extensive propagation of broader university enrollment during times of economic distress, state governments have an instrument at their disposal for lowering unemployment without generating negative budgetary implications. Thereby, the government pockets voter support not only by diminishing unemployment, but also by providing public goods particularly to the socially disadvantaged. We test our theoretical claims for the German states in a period ranging from 1975 to 2000 by means of panel fixed-effects models.
Keywords: Unemployment, Higher Education, University Budgets, Germany
JEL Classification: H19, H40, H73, P17
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