Public higher education spending and economic growth: the role of the private market for higher education and the mediating effect of educational attainment

Thesis (M.A., Economics)--California State University, Sacramento, 2013.This thesis revisits the effect of public higher education spending on economic growth. The data used covers all 50 U.S. States over the time period from 1989-2006. Unlike previous studies, we have included the variation in the composition of the market for higher education from state to state. In addition, a 2SLS model was specified, where public higher education spending had an indirect effect on economic growth through educational attainment. The results suggest that the relationship between public higher education spending and economic growth is only positive in those states with the smallest markets for private higher education. Also, results indicated that public higher education spending has a negative relationship with educational attainment. However, this negative effect decreases in states with larger markets for private higher education.Economic