Performance
funding in higher education is intended to incentivize increased degree
production at American colleges and universities by linking state funds
directly to institutional outcomes. However, many critics suggest that
such funding arrangements create systems of “winners and losers” by
rewarding some institutions over others.
This article explores the impact
of performance funding on state appropriations and investigates the
heterogeneous treatment effects across institution types.
The author finds that
performance funding consistently benefits high-resource institutions and
imposes financial burdens on low-resource institutions
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