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January 18, 2023

Cluster-Seminar Public Finances and Living Conditions

Local Unemployment and Postsecondary Education


January 18, 2023


Karl Popper Room
DIW Berlin
Room 2.3.020
Mohrenstr. 58
10117 Berlin


Andreas Leibing
This study uses administrative data on the universe of students in tertiary education in Germany and shows that university enrollment depends negatively on the local unemployment rate at high school graduation. This finding contradicts common evidence on countercyclical US undergraduate enrollment. Students' financial dependency and loan aversion suggest reduced parental income as dominant mechanism. During times of higher unemployment, students substitute away from purely academic universities and towards more vocationally oriented colleges and degrees. Recessions further increase the share of students in STEM fields, but decrease enrollment in teaching degrees.