Tuition fees and the demand for university places

Estimating the effect of tuition fee increases on demand for a university education is complicated by the potential endogeneity of tuition fees. The relative homogeneity of university tuition fees within Canadian provinces and the role of provincial governments in university funding and policies, provides an opportunity to use changes in the political party in power to identify plausibly exogenous changes in tuition fees. System estimates that take into account endogeneity of fees show large effects relative to single equation estimates, and to previous Canadian studies – a C$1000 increase in university tuition fees is estimated to reduce the enrolment rate by between 2.5 and 5 percentage points.