Education matching in Egyptian colleges and the Gale-Shapley algorithm : theoretical comparison with policy perspectives

Central to the success of education policy in emerging and developing nations is the study of the economic and distributional efficiency of student placement in higher-education colleges and universities. We study student placement in Egyptian colleges under the current demand / supply placement mechanism implemented in Egypt ε-mechanism) and compare to the Gale-Shapley algorithm from an economic efficiency point of view. The efficiency criterion is modeled on three grounds: (1) Pareto efficiency, (2) fair matching, and (3) strategy proofness. We show that the ε-mechanism is neither Pareto efficient nor strategy proof and, moreover, it cannot be improved to accommodate Pareto efficiency and strategy proofness simultaneously. The paper concludes that it is economically more efficient to adopt the Gale-Shapley algorithm in students' placement for Egyptian colleges. However, this conclusion is contingent on rational choice and complete information on minimum acceptable scores. This conclusion can be extended to other nations with similar socio-economic characteristics, especially African and other developing countries, who adopt higher education subsidies as part of their national economic policy.