Jacobs, B. and van der Ploeg, F. (2006). Guide to reform of higher education: A European perspective Economic Policy, 21(47):537--592.

Although there are exceptions, most European universities and institutions of higher education find it difficult to compete with the best universities in the Anglo-Saxon world. Despite the Bologna Agreement and the ambitions of the Lisbon Agenda, European universities are in need of fundamental reforms. We look at structural reforms of higher education and propose more effective use of public subsidies, more efficient modes of financing institutions of higher education, more diversity, competition, and transparency, larger private contributions and more equity. In the process we discuss the nature and governance of an institution of higher education, selection, hierarchy in higher education, grade-inflation, fair competition, private and social returns to education, income-contingent loans, equity, and transparency. We sum up with seven recommendations for reform of higher education in Europe.