New public management in U.S. higher education: is privatization associated with lower costs?

ABSTRACT

This study investigates the application of the three-dimensional New Public Management (NPM) framework to the public higher education setting to examine the relationship between one of the NPM dimensions, privatization, and cost management at 159 public research institutions in the United States between 2005 and 2015. We develop four statistical measures to quantify privatization and find privatization is linked to lower costs as institutions increase the share of revenue from auxiliary enterprises and tuition and fees, but higher costs when increasing out-of-state first-year enrolment. This raises management questions about public higher education cost efficiency, access and DEI for in-state students.

KEYWORDS:

• Public education
• privatization
• new public management
• spatial analysis

Disclosure statement

No potential conflict of interest was reported by the authors.

Data

The data is publicly available from the Integrated Postsecondary Education Data System (IPEDS – NCES) database

Notes

1. See Jaquette and Parra (2014) regarding why the OPEID is preferred to the IPEDS UNITID when establishing the institution unit of analysis.

2. The coefficients for the variables used in a quadratic form with interaction terms cannot be interpreted (i.e. number of associate degrees, certificates and faculty salary), but following Golgher and Voss (2016), the coefficients for the other variables can, after adjustment for the spatial lag.