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Working paper

The causal impact of performance-based funding on universities performance: quasi-experimental evidence from Russian HE WP BRP 221/EC/2019

In most countries experiencing structural transformation of higher education system one of the crucial goals is to tie up the amount of public funding of universities with their performance. The aim of this research is to analyze Russian context of performance-based funding reform and to provide a quasi-experimental assessment of performance-based funding mechanism introduction effects on Russian universities’ performance. The data comes from the Monitoring for HEIs performance and covers the period from 2014/2015 to 2017/2018 academic years. To evaluate the causal effect of the PBF policy on universities performance at the first step we form the treatment and the control groups by distinguishing groups of universities in accordance to their performance-based funding amount trend. As a second step, causal effect of the redistribution of public funds between universities as a result of PBF policy on universities performance is estimated. Results show that performance of universities is affected not by getting extra funding after the reform but by specific characteristics of universities such as status of a university and its location. The only short-run effect that remains after controlling for HEIs characteristics is effect of extra funding on average national exam scores. It means that performance-based funding policy gives the incentives to universities to be more selective in terms of students’ abilities.