Participation and Schooling in a Public System of Higher Education

We analyze the determinants of participation (whether to study) and schooling (where and what to study) in a public system of higher education, based on a unique dataset of all eligible high school pupils in an essentially closed region (Flanders). We .nd that pupils perceive the available institutions and programs as close substitutes, implying an ambiguous role for travel costs: they hardly a¤ect the participation decisions, but have a strong impact on the schooling decisions. To illustrate how our empirical results can inform the debate on reforming public systems, we assess the e¤ects of tuition fee increases. Uniform cost-based tuition fee increases achieve most of the welfare gains; the additional gains from fee di¤erentiation are relatively unim- portant. These welfare gains are quite large under conservative assumptions on the social cost of public funds, and there is a substantial redistribution from students to outsiders.