Skill Substitution, Expectations, and the Business Cycle

Andreas Leibing

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: This paper studies how labor market conditions around high school graduation affect postsecondary skill investments. Using administrative data on more than six million German graduates from 1995-2018, and exploiting deviations from secular state-specific trends, I document procyclical college enrollment. Cyclical increases in unemployment reduce enrollment at traditional universities and shift graduates toward vocational colleges and apprenticeships. These effects translate into educational attainment. Using large-scale survey data, I identify changes in expected returns to different degrees as the main mechanism. During recessions, graduates expect lower returns to an academic degree, while expected returns to a vocational degree are stable.

Keywords: college enrollment; expectations; business cycles; apprenticeships (search for similar items in EconPapers)
JEL-codes: D84 E24 E32 I23 I24 I26 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-edu
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/335943/1/2602.02483v1.pdf (application/pdf)

Related works:
Working Paper: Skill Substitution, Expectations, and the Business Cycle (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:335943

DOI: 10.48550/arXiv.2602.02483

Access Statistics for this paper

More papers in EconStor Preprints from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().