Local Labor Markets and Postsecondary Education

Abstract

Countercyclical college-going is a stylized fact in economics. But does this finding hold with a dual education system as an outside option? This study uses German register data to show that reduced local labor demand at high school graduation decreases college enrollment and attainment. More students choose vocationally oriented colleges and apprenticeships instead of traditional universities. Conditional on economic preferences, these effects are reversed for high SES graduates. Survey data further reveals that low-achieving young men expect higher relative returns to vocational education during recessions. The findings suggest that investment in firm-specific human capital is perceived as an insurance mechanism.

Andreas Leibing

Postdoctoral Researcher

I’m an applied microeconomist with a particular interest in labor economics and the economics of education.