Labour market outcomes and their impact on tertiary decisions in Germany: class and gender differences

Abstract

In order to explain why students choose to enter or abstain from university education, economic theories of educational choice assume that the income returns to a degree are critical in motivating students’ educational decisions. However, important group differences between men and women as well as students from different class backgrounds that might influence the relationship between expected returns and educational choice have largely been ignored in this line of research. This article explores how and to what extent changes in income and unemployment returns for graduates influence the educational decisions of students that are eligible to enrol in tertiary education in Germany. A unique dataset from the German Higher Education Information System Institute consisting of large-scale surveys of university qualified students is analysed. Contrary to many previous findings, the results of the article suggest that variations in relative income returns do not seem to affect the educational decisions of school leavers while variation in unemployment seems to have significant effects on postsecondary decisions for women only. Furthermore, female students from lower-class backgrounds appear to be more responsive to changes in unemployment rates than their higher-class peers.