Do public universities replace state appropriations with master’s students?

This study investigates the relationship between state appropriations and master’s degree (MA) enrollment at public master’s universities from 1992-93 to 2014-15. Two competing theoretical perspectives emerge. Resource dependence theory argues that public universities have a financial incentive to grow MA enrollment following declines in state appropriations. The capacity building perspective, which draws from economics, argues that state appropriations increase university capacity to enroll more MA students. Fixed effects distributed lag panel models find a positive, significant relationship between state appropriations and MA enrollment at master’s universities. This relationship was strongest in the 1990s but became insignificant during the 2000s.