The impact of the establishment of a university in a peripheral region on the local labour market for graduates

The establishment of a university can be used as policy instrument to revitalize peripheral regions. Such newly established universities tend to experience rapid growth, but little is known about how this affects the labour market for graduates in these regions over time. A quantitative case study, employing individual-level microdata, analyzed changes in the wage levels and mobility of graduates of Aalborg University, which was established in 1974 in the North Denmark region. The analysis shows that the establishment of Aalborg University contributed to the upgrading of the human capital in the region, fulfilling a demand in the labour market, as indicated by wage growth similar to that of the labour market in other regions and a growing percentage of local young people to stay in the region after graduation. Furthermore, the university increased its intake of students from outside the region, who then as graduates dispersed to other parts of the country, thereby serving to supply human capital at the national level. These insights add to our understanding of how a new university can play a role in the economic development of a peripheral region, while at the same time also having impact at the national level. Nevertheless, this instrument is not applicable to all regions in the same way, since local critical mass and regional embeddedness are required to enable a region to absorb a substantial number of graduates and benefit from the presence of the university.