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Economic Challenges in Higher Education.

The need for substantive research in the field of the economics of education is growing. Concerns over the efficiency of the public school system, fears that the American labor force is becoming less competitive, rises in college tuition to a level where the average family finds it difficult to finance a college education, claims that college professors are unproductive, and declining federal and state subsidies have all increased the need for researchers in the field to provide answers rather than questions. As subsidy dollars become increasingly scarce, the demand for studies that assist policy makers to make informed resource decisions grows. Thusfar, supply has not been responsive, in part, because research funding in this area has been limited and, in part, because economists have been preoccupied with other fields of interest. Indeed, fewer economists are writing in this field today than in the last two decades, and the resulting vacuum has largely been filled by scholars in other disciplines.

The appearance of this book by an eminent group of economists must thus be welcomed with open arms and I opened it with the expectation that important gaps in my own knowledge might be filled. These hopes were modestly fulfilled. The authors examine three higher education areas: the growth and composition of undergraduate enrollments, the supply of faculty in academic labor markets, and the rising costs of operating colleges and universities. These are useful topics and much of the research undertaken by economists in these areas is not widely disseminated.

The authors set forth several objectives for their work; to provide findings from the economics literature in a form accessible to noneconomists, to present and discuss relevant data to their respective fields of study, and to highlight the implications of their findings for both the higher education industry and for the public policies that affect the industry. They meet with varying degrees of success in achieving these objectives. The attempt to reach noneconomists leaves the informed reader with the impression that they are sometimes talking down and many of the data presentations document trends already well recognized in the literature. The volume is most useful for those interested in having a wide variety of previously published studies reviewed and presented in one place and for those who do not have the time to read the journals.

Part 1 is concerned with undergraduate demand and Chapter 1 provides several comparisons of U.S. college enrollments with those in other countries. This makes interesting reading. Chapter 3 offers a useful summary of economic enrollment models while Chapter 4 contains a thoughtful discussion of the role of financial aid and the effect of changes in financial aid programs on the number and composition of college enrollments. Not surprisingly, the analysis provides strong evidence that demographics continue to be the critical predictor of enrollments. However, the analysis of financial aid has important implications for future enrollments. The discussion of whether the economic disparity between those who did and did not attend college is growing in Chapter 5 is also thought-provoking and should facilitate debate on this important subject.

Part 2 focuses on academic supply issues and it opens with a discussion of recent projections of shortages. Much of the material has appeared elsewhere. However, a reader new to the subject will find the discussion of the stock flow model useful and many interesting (albeit voluminous) tabulations are presented which are not normally accessible. The discussion of occupational choice in Chapter 8 is illuminating, as is the analysis of whether the shortage of American PhD's would be eased by increased reliance on foreign students. Unfortunately, Ehrenberg's discussion of public policies and the doctorate market raises more questions than it answers and there is little that is relatively new in his discussion.

Rising operating costs are the primary concern of Part 3. Chapter 11 offers six explanations for the rapid rise in the costs of higher education. Financial data from 2,045 institutions, as well as aggregate time series data, are used to attempt to identify the determinants of rising costs. The analysis indicates that no one explanation exists for the trend. It is interesting to note that costs per student rise when demand "dampens" and slow when demand recovers and enrollments increase. My concern with equating demand and enrollments notwithstanding, this finding has several policy implications for an economy hovering at the brink of recovery.

Viewed in total, this volume brings together a vast supply of data in a coherent, informed, and well thought out manner. While incomplete as an analysis of the state of knowledge in the economics of higher education field, it does provide useful insights into what happened in the 1980s and as to the trends likely to affect the 1990s. It is also an interesting supplemental text for an economics of education course. Unfortunately, policy makers planning to read this book in the hopes of finding answers to the difficult allocation issues facing them should not put away their ouija boards.
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Author:Tuckman, Howard P.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Apr 1, 1993
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