Higher Education.

• Position: Bureau News - Panel Discussion

The NBER's Working Group on Higher Education met in Cambridge on April 30. The Higher Education Working Group examines aspects of the higher education industry, including admissions, financial aid, enrollment patterns, financing, cost structure, the research enterprise, and the role of teaching as well as public policies that affect colleges and universities. Group Director Charles T. Clotfelter, NBER and Duke University, organized the meeting at which these papers were discussed:

Marie C. Thursby, NBER and Georgia Institute of Technology; Jerry Thursby, Emory University; and Emmanuel Dechenaux, Purdue University, "Shirking, Shelving, and Sharing Risk: The Role of University License Contracts"

Discussants: Irwin Feller, Pennsylvania State University

Johanne Boisjoly, University of Quebec at Rimouski; Greg J. Duncan, Northwestern University; Michael Kremer, NBER and Harvard University; Dan M. Levy, Mathematica Policy Research; and Jacque Eccles, University of Michigan, "Empathy or Antipathy? The Impact of Diversity"

Discussant: Bruce Sacerdote, NBER and Dartmouth College

Peter Arcidiacono and Jacob L. Vigdor, Duke University, "Does the River Spill Out? Estimating the Economic Returns to Attending a Racially Diverse College"

Discussant: Ronald G. Ehrenberg, NBER and Cornell University

Susan Dynarski, NBER and Harvard University, "Who Benefits from the Education Saving Incentives? Income, Educational Expectations and the Value of the 529 and Coverdell"

Discussant: Sarah Turner, NBER and University of Virginia

Larry D. Singell, Jr., Glen R. Waddell, and Bradley R. Curs, University of Oregon, "Hope for the Pell? The Impact of Merit-Aid on Needy Students"

Discussant: Eric Bettinger, NBER and Case Western University

University, license contracts are more complex than the simple fixed fees and royalties typically examined by economists. Thursby, Thursby, and Dechenaux argue that these contracts are complex because of multiple distortions present when embryonic inventions are licensed. The authors test whether moral hazard, adverse selection, and risk aversion all play a role. Milestone payments can address inventor moral hazard without the inherent inefficiency in royalties; royalties are optimal only when the licensee is risk averse. The potential for a licensee to shelve inventions is one adverse selection problem that can be addressed by annual fees if the shelving is unintentional; milestones are needed if the firm licensed the invention with...