Ambitious plans and a sputtering economy might put pressure on IU trustees to find other ways to balance their budget, such as increasing tuition and cutting back on employee pay, IU officials said.During a recession, cutting back on labor costs is not unusual, but charging your customers a higher price?
Tuesday, October 21, 2008
Universities Do Not Operate in the Economy
I've been seeing this a lot recently, an example from the IDS:
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2 comments:
Education is a substitute for working. If there is a recession, such as that wages fall, then the demand for education increases. Ceteris paribus, this leads to an increase in P and Q.
Good point, if the opportunity cost of attending falls then demand should increase, which would be a countervailing effect to the income effect. I guess it would be an empirical question to see which is stronger (the article mentions nothing about enrollment).
It would probably be important if there is a skill bias in the recession.
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