The Effects of Expanding Higher Education on Wages and Establishments' Labor Demand

Eric Schuss

No 239, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: This study examines the impact of increased access to higher education on labor demand, wages, and labor market structure. I focus on the quasi-experimental increase in the number of universities and universities of applied sciences in Bavaria since the 1970s and establishment of such higher education institutes under the "Future of Bavaria Offensive" program in the 1990s. I use administrative establishment-level data and find a positive but statistically insignificant effect on median wages resulting from expansion of higher education. While there is a negative but insignificant impact on wages of highly skilled workers, those without academic or vocational degree experience an increase in wages. I also find that training activities decline immediately after establishment of a new higher education institution. Further empirical analyses indicate that this decline is driven by changes in educational choices of school graduates rather than by labor demand of establishments.

Keywords: Expansion of higher education; Labor demand; Wages; Event-study design (search for similar items in EconPapers)
JEL-codes: C21 I23 J23 J31 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2025-04
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Persistent link: https://EconPapers.repec.org/RePEc:iso:educat:0239

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