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Higher education expansion and unskilled labour market outcomes

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  • Oppedisano, Veruska

Abstract

The increasing demand for higher education reduces the supply and changes the composition of unskilled secondary school graduates, and it may therefore affect their labour market outcomes. However, there is little empirical evidence on these effects. This paper analyses a large-scale expansion of higher education supply in Italy, which occurred at the end of the 1990s, to estimate the effects of the policy on the secondary school graduates’ probability of being inactive, employed, unemployed, and on their wages. Robust difference-in-differences estimates show that the probability of being inactive decreases by 4.5 percent, as the policy significantly displaces individuals from inactivity. Those shifting across educational level have middle ability but favourable parental background, and would have worked in the family firm, or waited for a public competition had the expansion not took place, indicating that a new campus nearby induces mainly those with a low opportunity cost to enrol in university. Lack of significant effects on the labour market outcomes of the workforce provides evidence in favour of the human capital hypothesis. However, the policy may have induced too little variation in the workforce to distinguish between the human capital and signalling theory.

Suggested Citation

  • Oppedisano, Veruska, 2014. "Higher education expansion and unskilled labour market outcomes," Economics of Education Review, Elsevier, vol. 40(C), pages 205-220.
  • Handle: RePEc:eee:ecoedu:v:40:y:2014:i:c:p:205-220
    DOI: 10.1016/j.econedurev.2014.03.005
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    Cited by:

    1. Patrick Lehnert & Madison Dell & Uschi Backes-Gellner & Eric Bettinger, 2024. "The Effect of Postsecondary Educational Institutions on Local Economies: A Bird's-Eye View," Economics of Education Working Paper Series 0210, University of Zurich, Department of Business Administration (IBW).
    2. Chien-Liang Chen & Lin-Chuan Chen, 2021. "The Impact of Higher Education Expansion on the Educational Wage Premium in Taiwan: 1985 to 2015," IJFS, MDPI, vol. 9(3), pages 1-12, July.
    3. Didier, Nicolás, 2021. "Does the expansion of higher education reduce gender gaps in the labor market? Evidence from a natural experiment," International Journal of Educational Development, Elsevier, vol. 86(C).
    4. Bacalhau, Priscilla & Mattos, Enlinson & Ponczek, Vladimir Pinheiro, 2019. "College quality signaling and individual performance: effects on labor market outcomes after graduation," Textos para discussão 502, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    5. Somani, Ravi, 2021. "The returns to higher education and public employment," World Development, Elsevier, vol. 144(C).

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    More about this item

    Keywords

    Inactivity; Higher education expansion; Signalling; Human capital;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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