Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279103 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16405
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
How do college students and postsecondary institutions react to changes in skill demand in the U.S. labor market? We quantify the magnitude and nature of response in the 4-year sector using a new measure of labor demand at the institution-major level that combines online job ads with geographic locations of alumni from a professional networking platform. Within a shift-share setup, we find that the 4-year sector responds. We estimate elasticities for undergraduate degrees and credits centered around 1.3, generally increasing with time horizon. Changes in non-tenure-track faculty allocations and the credits they teach partially mediate this overall response. We provide further evidence that the magnitude of the overall response depends on both student demand and institutional supply-side constraints. Our findings illuminate the nature of educational production in higher education and suggest that policy efforts that aim to align human capital investment with labor demand may struggle to achieve such goals if they target only one side of the market.
Subjects: 
labor demand
skill demand
college major
educational investment
JEL: 
J23
J24
I23
Document Type: 
Working Paper

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