EAIR Forum, Copenhagen Student based funding in higher education systems with declining and uncertain enrolments: the Portuguese case Carlos Vieira Isabel Vieira Universidade de Évora, Portugal

EAIR Forum, Copenhagen Demand, supply (broken line) and enrolments (red), 10 3

EAIR Forum, Copenhagen demand projections are critical for strategic planning, both at the government and individual institutions levels particularly in higher education systems where funding formulas attach an almost exclusive weight on total enrolled students

EAIR Forum, Copenhagen Previous demand forecasts

EAIR Forum, Copenhagen Determinants of demand for higher education Demography –birth rates –imigration Success rates pre-university –drop-out rates –academic success Social and cultural factors –female participation rates –parents educational attainment Economic factors Geography

EAIR Forum, Copenhagen Determinants of demand for higher education Demography Success rates pre-university Social and cultural factors Economic factors –household income –wage premium vs costs and foregone earnings –tuition fees –student support policies –student loan programmes Geography

EAIR Forum, Copenhagen Empirical approach: Exploratory analysis –Survey on Income and Living Conditions (SILC) –Logit model Estimation of demand function –Demographic, socioeconomic and academic determinants –Estimation by ordinary least squares Demand forecast

EAIR Forum, Copenhagen Exploratory analysis – logit model VariablesParameter estimatest-statistic Father with HE degree Mother with HE degree Capacity to cover costs Housing tenure Intercept Number of observations Log-likelihood value Pseudo r 2 RESET test (p-value) LR test (p-value) Pearson goodness-of-fit test (p-value)

EAIR Forum, Copenhagen Demand function Cand t : candidates to higher education Births t-18 : live births eighteen years before popHE t : population with HE degree Economy t : GDP real growth rate, real GDP per capita, unemployment rate Success t-1 : academic success 12 th year t 1 : time trend D: dummy variables

EAIR Forum, Copenhagen model variables (1)(2)(3)(4) R 2 Intercept Live births (t-18) Population with HE degree Real GDP growth rate GDP per capita real growth rate Unemployment rate Academic success 12 th year (t-1) trend ** *** *** ** *** *** *** *** ** *** *** *** *** ** *** *** *** *** ** ** **

EAIR Forum, Copenhagen Demand forecast - assumptions Births –observed values (t-18) Population with HE degree –maintenance of current trend –wide gap of tertiary attainment (half OECD average) Real GDP growth rate –IMF forecasts until 2013 –2% growth afterwards (ECB) Academic success –ten years average –stable values

EAIR Forum, Copenhagen Demand forecast

EAIR Forum, Copenhagen Concluding remarks Low demand for higher education insufficient funding/excess capacity Institutions merge or close Change in financing rules Urgent and effective policies to widen admission base

EAIR Forum, Copenhagen Further research Impact of ‘Bologna’ Search for significance of further determinants (e.g. wage premium) … Awaiting your comments…