Public Spending and Education: Understanding Italy's Lag in Tertiary Education Attainment

This thesis examines whether limited public spending on higher education contributes to Italy's low levels of tertiary education attainment. I use the 2010 Gelmini reform—which introduced severe funding cuts and a performance-based system for allocating university funding—as an exogenous shock to government spending and assess its impact on tertiary attainment rates. The analysis applies causal inference methods, including difference-in-differences and synthetic controls, and considers the reform's impact across two dimensions: in Italy relative to other European countries (cross-country) and across different Italian universities (within-country). While the cross-country analysis does not yield statistically significant effects, the within-country analysis shows that lower-ranked universities, which were more exposed to funding cuts, experienced significantly larger enrollment declines after the reform. These findings suggest that public spending is critical to tertiary education outcomes and that performance-based funding systems may deepen inequalities among institutions.