Public education spending in the German Länder: adjustment to demographic shocks, politics, and cost efficiency [Elektronische Ressource] / vorgelegt von Gerhard Kempkes

TECHNISCHE UNIVERSITÄT DRESDEN
Fakultät Wirtschaftswissenschaften




PUBLIC EDUCATION SPENDING IN THE GERMAN
LÄNDER: ADJUSTMENT TO DEMOGRAPHIC SHOCKS,
POLITICS, AND COST EFFICIENCY



Dissertation zur Erlangung des akademischen Grades
Dr. rer. pol.


vorgelegt von

Dipl.-Volkswirt, Dipl.-Betriebswirt (BA)
Gerhard Kempkes

geboren am 11. Juli 1977 in Lüneburg


Doktorvater
Prof. Dr. Helmut Seitz

Gutachter
Prof. Dr. Marcel Thum
Prof. Dr. Alexander Kemnitz


Tag der Verteidigung
18. Dezember 2009



CONTENTS

LIST OF FIGURES........................................................................................................ III
LIST OF TABLES ......................................................................................................... IV
1 INTRODUCTION.....................................................................................................1
2 GERMANY’S EDUCATION AND POLITICAL SYSTEMS: AN OVERVIEW .. 4
2.1 The German education system ...............................................................................................................4
2.2 Relevant facts on the link between parental background and track choice...........................................12
2.3 Demographics of the school- and university-relevant populations.......................................................14
2.4 Political parties, platforms and manifestos...........................................................................................17
3 PRIMARY EDUCATION: ADJUSTMENT TO DEMOGRAPHIC SHOCKS IN
THE EAST GERMAN LÄNDER.................................................................................. 21
3.1 Introduction ..........................................................................................................................................21
3.2 Background: resource adjustments and the composition of education spending..................................24
3.2.1 Existing empirical evidence ..........................................................................................................24
3.2.2 A decomposition of education spending .......................................................................................26
3.2.3 Educational effectiveness..............................................................................................................28
3.3 Data and summary statistics.................31
3.4 Empirical analysis ................................................................................................................................36
3.4.1 Descriptive evidence .....................................................................................................................36
3.4.2 Empirical strategy and the econometric model .............................................................................39
3.4.3 Estimation results..........................................................................................................................44
3.4.3.1 The magnitude of resource adjustments.................................................................................44
3.4.3.2 The composition of resource adjustments..............................................................................49
3.4.3.3 An attempt to evaluate the educational effectiveness of resource adjustments......................52
3.4.3.4 Isolating the demographic shock: evidence from the 1993-2002 period ...............................53
3.5 Conclusions ..........................................................................................................................................57
4 LOWER SECONDARY EDUCATION: THE POLITICAL ECONOMY OF
ABILITY-TRACKING IN THE WEST GERMAN LÄNDER..................................... 59
4.1 Introduction ..........................................................................................................................................59
4.2 Background: partisan theory in public education .................................................................................61
4.2.1 Partisan theory...............................................................................................................................61
4.2.2 Paheory in public education ...............................................................................................62
4.2.2.1 The practise of ability-tracking..............................................................................................63
4.2.2.2 Resource allocation across tracks .........................................................................................66
4.3 Data and summary statistics .................................................................................................................73
I 4.4 Empirical analysis I: political influence on the education system and the practise of ability-tracking 78
4.4.1 Descriptive evidence .....................................................................................................................78
4.4.1.1 Some charts............................................................................................................................78
4.4.1.2 Some correlations ..................................................................................................................84
4.4.2 Stationarity....................................................................................................................................85
4.4.4 Robustness checks.........................................................................................................................92
4.4.4.1 An alternative measure for comprehensive schooling ...........................................................92
4.4.4.2 An alternative measure for POLITICAL: the coalition pattern .............................................94
4.4.4.3 Another measure for POLITICAL: the Länder education ministers......................................96
4.4.4.4 Dynamic model on the share itself (and not on differenced data) .........................................98
4.4.4.5 Exploiting the variation across Länder (between estimations)............................................103
4.4.4.6 Reverse causality: from education policy to election outcomes?106
4.4.5 Summary...................112
4.5 Empirical analysis II: political influence on resource allocation across tracks ..................................113
4.5.1 Descriptive evidence ...................................................................................................................113
4.5.1.1 Some charts..........................................................................................................................113
4.5.1.2 Some correlations ................................................................................................................115
4.5.2 Stationarity..................................................................................................................................116
4.5.3 Baseline model............................................................................................................................118
4.5.4 Robustness checks.......................................................................................................................122
4.5.4.1 Endogenous student demand ...............................................................................................122
4.5.4.2 An alternative measure for POLITICAL: the coalition pattern ...........................................123
4.5.4.3 Another measure for POLITICAL: the Länder education ministers....................................126
4.5.4.4 Reverse causality: from resource allocation to election outcomes?127
4.5.5 Summary .....................................................................................................................................130
4.6. Conclusions .......................................................................................................................................131
5 HIGHER EDUCATION: DETERMINANTS OF GERMAN UNIVERSITIES’
COST EFFICIENCY.................................................................................................... 134
5.1 Introduction.........................134
5.2 Background: literature review and hypotheses on the determinants of university cost efficiency .....136
5.3 Data and summary statistics ...............................................................................................................143
5.4 Empirical analysis ..............................................................................................................................146
5.4.1 University efficiency and Länder regulatory frameworks...........................................................146
5.4.1.1 Descriptive evidence............................................................................................................146
5.4.1.2 Evidence from a stochastic frontier .....................................................................................148
5.4.2 The link between university costs and the private economic environment .................................154
5.4.2.1 Descriptive evidence154
5.4.2.2 Econometric evidence on the effect from universities’ environment on costs.....................