Do tuition fees affect enrollment behavior? Evidence from a ‘natural experiment’ in Germany

This paper uses the introduction of tuition fees in seven of the sixteen German states in 2007 as a natural experiment to identify the effects of tuition prices on enrollment probabilities. Based on information on enrollment decisions of the entire population of high-school graduates between 2002 and 2008, I find a negative effect of tuition fees on enrollment behavior. The effect is larger than in existing studies for European countries, but of a similar magnitude as effects identified with U.S. data. A potential spill-over effect of the policy intervention to the comparison group is accounted for by using the estimation results to calibrate a structural model of the enrollment decision.

► First study that quantifies the effect of tuition fees on enrolment with a natural experiment. ► Paper finds a negative impact of tuition fees on enrolment rates. ► Paper uses a novel way to deal with a contaminated control group.