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The Regional Economic Impact of More Graduates in the Labour Market: A ‘Micro-to-Macro’ Analysis for Scotland

Author

Listed:
  • Kristinn Hermannsson

    (Robert Owen Centre, School of Education, University of Glasgow, St Andrews Building, 11 Eldon Street, Glasgow G3 6NH, Scotland)

  • Katerina Lisenkova

    (National Institute of Economic and Social Research (NIESR), 2 Dean Trench Street, Smith Square, London SW1P 3HE, England)

  • Patrizio Lecca
  • J Kim Swales
  • Peter G McGregor

    (Department of Economics and Strathclyde Institute for Public Policy (SIPPI), University of Strathclyde, Sir William Duncan Building, 130 Rottenrow, Glasgow G4 0GE, Scotland)

Abstract

This paper explores the system-wide impact of graduates on the regional economy. Graduates enjoy a significant wage premium, often interpreted as reflecting their greater productivity relative to nongraduates. If this is so there is a clear and direct supply-side impact of higher education institution (HEI) activities on regional economies. We use an HEI-disaggregated computable general equilibrium model of Scotland to estimate the impact of the growing proportion of graduates in the Scottish labour force that is implied by the current participation rate and demographic change, taking the graduate wage premium in Scotland as an indicator of productivity enhancement. While the detailed results vary with alternative assumptions about the extent to which wage premia reflect productivity, they do suggest that the long-term supply-side impacts of HEIs provide a significant boost to regional GDP. Furthermore, the results suggest that the supply-side impacts of HEIs are likely to be more important than the expenditure impacts that are the focus of most HEI impact studies.

Suggested Citation

  • Kristinn Hermannsson & Katerina Lisenkova & Patrizio Lecca & J Kim Swales & Peter G McGregor, 2014. "The Regional Economic Impact of More Graduates in the Labour Market: A ‘Micro-to-Macro’ Analysis for Scotland," Environment and Planning A, , vol. 46(2), pages 471-487, February.
    • Handle: RePEc:sae:envira:v:46:y:2014:i:2:p:471-487
    DOI: 10.1068/a45326
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