1. EAIR Forum, Copenhagen 20081 Student based funding in higher education systems with declining and uncertain enrolments: the Portuguese case Carlos Vieira Isabel Vieira Universidade de Évora, Portugal

2. EAIR Forum, Copenhagen 20082 Demand, supply (broken line) and enrolments (red), 10 3

3. EAIR Forum, Copenhagen 20083 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

4. EAIR Forum, Copenhagen 20084 Previous demand forecasts

5. EAIR Forum, Copenhagen 20085 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

6. EAIR Forum, Copenhagen 20086 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

7. EAIR Forum, Copenhagen 20087 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

8. EAIR Forum, Copenhagen 20088 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) 2.0653 1.4525 0.4559 0.7053 -2.5628 1047 -603.586 0.129 0.4751 0.000 0.311 3.726 3.741 6.267 3.479 -9.769

9. EAIR Forum, Copenhagen 20089 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 1977-95 D: dummy variables

10. EAIR Forum, Copenhagen 200810 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) trend1 0.884 -24.294 ** 1.717 *** 1.093 *** 0.041 ** 0.029 *** 0.886 -25.335 *** 1.783 *** 1.113 *** 0.042 ** 0.0282 *** 0.870 -28.068 *** 1.939 *** 0.865 *** -0.056 ** 1.179 *** 0.899 -25.933 *** 1.741 *** 1.007 *** 0.034 ** 0.6333 ** 0.0188 **

11. EAIR Forum, Copenhagen 200811 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

12. EAIR Forum, Copenhagen 200812 Demand forecast

13. EAIR Forum, Copenhagen 200813 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

14. EAIR Forum, Copenhagen 200814 Further research Impact of ‘Bologna’ Search for significance of further determinants (e.g. wage premium) … Awaiting your comments…