Evaluating Effects of Tuition Fees: Lasso for the Case of Germany
June, 12th 2019
Karlsruhe Institute of Technology (KIT)
We study the effect of the introduction of university tuition fees on the enrollment behavior of students in Germany and determine a significant negative impact of fees on student enrollment. We do this by using an appropriate Lasso-technique that is crucial for identification of the magnitude and significance of the effect in this case with potentially many relevant controlling factors and only a short time frame where fees existed. Furthermore, we explicitly control for spatial cross-effects capturing the heterogeneity in the introduction scheme of fees that originated from the ability of each federal state (“Bundesland”) to set its own educational policy. We show that a post-double selection strategy combined with stability selection identifies the true influencing variables, while a standard linear panel regression is not able to determine the magnitude of the effect of tuition fees in this case.