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Demand and Supply Effects and Returns to College Education - Evidence from a Natural Experiment with Engineers in Denmark

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Abstract

The demand and supply model predicts that a larger relative net supply of a particular skill group will negatively affect its relative wage. To test this, we use the opening of a new university in Denmark as a natural experiment. We show that the opening of Aalborg University created a shock to the supply of structural engineers in the mid-1980s. Because Aalborg University did not have a chemical engineering program, we use chemical engineers as a control group and find that the wages of structural engineers dropped in and around 1984, when the supply of structural engineers peaked.

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  • Hans-Peter Y. Qvist & Anders Holm & Martin D. Munk, 2016. "Demand and Supply Effects and Returns to College Education - Evidence from a Natural Experiment with Engineers in Denmark," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20164, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
  • Handle: RePEc:uwo:hcuwoc:20164
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