Do Universities Benefit Local Youth? Evidence from University and College Participation, and Graduate Earnings Following the Creation of a New University

In this study, I explore the relationship between the presence of a local university in a city and university and college participation among local youth. The evidence is drawn from Census data, along with information on the creation of new university degree-granting institutions in Canada. Students who do not have access to a local university are far less likely to go on to university than students who grew up near a university, likely due to the added cost of moving away to attend, as opposed to differences in other factors (e.g., family income, parental education, academic achievement). When distant students are faced with a local option, however, their probability of attendance substantially increases. Specifically, the creation of a local degree-granting institution is associated with a 28.1% increase in university attendance among local youth, and large increases were registered in each city affected. However, the increase in university participation came at the expense of college participation in most cities. Furthermore, not everyone benefited equally from new universities. In particular, students from lower income families saw the largest increase in university participation, which is consistent with the notion that distance poses a financial barrier. Also, local aboriginal youth only saw a slight increase in university participation when faced with a local university option.