Higher education financing, faculty gender diversity, and STEM graduation outcomes in Europe and Central Asia

Abstract This study examines how public investment, faculty compensation, and faculty gender diversity relate to system-level STEM graduation rates across 58 countries in Europe and Central Asia, a region underrepresented in comparative higher education research. Using World Bank panel data from 2015 to 2023, we estimate dynamic relationships with a two-step system Generalized Method of Moments model and assess distributional heterogeneity using quantile regression. Results indicate that higher tertiary education expenditure and stronger faculty compensation are associated with higher STEM graduation rates. Moreover, faculty gender diversity positively moderates these relationships, suggesting that more gender-inclusive academic workforces strengthen the extent to which financial investments translate into completion outcomes. The findings underscore the value of integrating financing reforms with equity-oriented staffing strategies to improve STEM attainment and inform higher education policy across diverse national contexts.