Baumol vs. Bowen
A fascinating paper came out recently on SSRN, which should be of interest to anyone concerned with the economics of higher education. Its purpose was to answer a most interesting question: is cost-inflation in higher education driven by internal factors, or external ones? There are two leading theories about cost-inflation in higher education. The first, proposed by William Baumol (whose new book I mentioned last week), argues that external factors are to blame. Education, as a labour-intensive good, says Baumol, will always see