The Out-of-State Tuition Distortion
- American Economic Journal: Economic Policy (Forthcoming)
Public universities typically charge much higher tuition to non-residents. We first investigate the welfare implications of this tuition gap in a simple model. While the social planner does not distinguish between residents and non-residents, state governments set higher tuition for non-residents. The welfare gains from reducing the tuition gap can be characterized by a sufficient statistic relating out-of-state enrollment to the tuition gap. We estimate this sufficient statistic via a border discontinuity design using data on the geographic distribution of students by institution.
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