How Effective is Performance-based Funding in German Higher Education?

Formula-based funding systems are usually implemented within the higher education sector with the purpose of setting incentives for competitive behaviour. This paper critically examines whether this goal is attained in practice: Do the performance-based formulae applied in German Higher Education at state and institutional level really lead to changes in competitive behaviour? Empirical studies show that the disclosure of performance data itself generates noticeable incentives, mainly because it leads to more debates on performance between decision-makers at policy- and university-level. By comparison, the actual financial effects of performance-based formulae are often of only secondary significance.

06.07.2008 | Michael Jaeger (Hannover)