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

Presenter

Stephan Thomsen (Leibniz University Hannover)

Coauthors

Johannes Goehausen

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 demand effects due to a more intensive use of skilled labor.