Higher education.

The NBER's Research Group on Higher Education met in Cambridge on December 11. Charles T. Clotfelter, NBER and Duke University, Director of the Research Group, organized this program:

William Johnson, University of Virginia, "Distributional Issues in the Public Support of Higher Education"

Discussant: William Becker, Indiana University

Ronald G. Ehrenberg, NBER and Cornell University, and Jaroslava Mykula, Cornell University, "Do Indirect Cost Rates Matter?" (NBER Working Paper No. 6976)

Discussant: John Siegfried, Vanderbilt University

Charles F. Manski, NBER and Northwestern University, John Newman, World Bank, and John v. Pepper, University of Virginia, "Using Performance Standards to Evaluate Social Programs with Incomplete Outcome Data: General Issues and Application to a Higher Education Block Grant Program"

Discussant: Eric A. Hanushek, NBER and University of Rochester

Caroline M. Hoxby, NBER and Harvard University, and Bridget Terry, Harvard University, "Explaining Rising Income and Wage Inequality among the College Educated" (NBER Working Paper No. 6873)

Discussant: Christopher Jencks, Harvard University

Paula Stephan and Grant Black, Georgia State University, "Bioinformatics: Does the U.S. System Lead to Missed Opportunities in Emerging Fields? A Case Study"

Discussant: Jerry R. Green, NBER and Harvard University

Johnson estimates the dollar amount of public higher education subsidies received by U.S. youth and considers how those subsidies are distributed vis-a-vis parental and parent-child lifetime income. If subsidies do not affect economic behavior and are financed by taxes which are proportional to income, then their distributional effects are either roughly neutral or mildly progressive. Johnson also considers the direct subsidy to public institutions and the indirect subsidy to private institutions through favorable tax treatment. He suggests that when their effect on schooling decisions is considered, subsidies may actually generate their cost in added discounted tax revenue.

Ehrenberg and Mykula's analysis suggests that changes in indirect cost rates influence the allocation across institutions of total federal research funding, direct cost funding, indirect cost funding, and the number of grants. On balance, increases in indirect cost rates benefit institutions and faculty that are already large recipients of federal research funding. In contrast, reductions in indirect cost rates benefit institutions and faculty that...