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Early Career Effects of Entering the Labor Market During Higher Education Expansion

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  • Goehausen, Johannes

    (Leibniz Univeristät Hannover)

  • Thomsen, Stephan L.

    (Leibniz University of Hannover)

Abstract

We evaluate the labor market effects of an increasing supply of high-skilled labor, resulting from a higher education expansion at established German universities. Exploiting variation in exposure across regions and cohorts, we estimate early career effects for labor market entrants. We find that high-skilled wages decline initially, particularly in non-graduate jobs, but recover over the first five years of experience. Medium-skilled workers are barely affected, while low-skilled workers benefit from higher wage growth in non-routine-intensive jobs. We explain the dynamics of the effects by two countervailing mechanisms: immediate supply effects and gradual technology effects through increasing skilled labor demand.

Suggested Citation

  • Goehausen, Johannes & Thomsen, Stephan L., 2024. "Early Career Effects of Entering the Labor Market During Higher Education Expansion," IZA Discussion Papers 17487, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17487
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    More about this item

    Keywords

    higher education expansion; labor market entry; wages; regional labor markets;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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