Economics Seminar Economics (ESE) - 2023/2024

Interviene: Daniel Kreisman, Georgia State University

Title: Open the flood gates or skim the cream? Selective vs. open enrollment policies and the race for talent in Italy

Abstract: The predicted decline in the number of students attending higher education due to population ageing, as well as the resulting increased rivalry for a scarce resource, will put Italian universities under strain creating incentives to reduce selectivity. Yet, increasing enrollment might further reduce demand by lowering the average quality of students, diluting the degree signal, possibly to the detriment of high-achieving students due to negative peer-effects. Thus, universities face a trade-off in increasing the supply of college-educated workers in their region while competing with other universities on the quality margin. We ask how this inter-university competition plays out and what effects it might portend on the future supply of college-educated labor in Italy. We show that while institutions in Northern Italy have steadily increased the proportion of selective admission programs, those in Southern Italy have reduced it. This reduced the number of Southern Italians enrolling in selective Northern programs, but increased the average quality of those students considerably. We also show that when programs shift to selective enrollment graduation rates and student marks increase, though the total number of graduates is lower. In ongoing work we are estimating the relative contributions of smaller classes and peer effects due to composition to this phenomenon. Our main results suggest that inter-university competition has the potential to exacerbate the North-South race for talent.