Event Type: Lecture

This paper studies whether human capital investments are based on local rather than national demand, using three shocks with differential local effects: the dot-com crash, the 2008 financial crisis, and the shock making Delaware a financial headquarters. Event-study analyses show universities more exposed to sectoral shocks experience greater changes in sector-relevant majors. Using students' home and university locations and nearest-neighbor matching, this paper develops a test for whether information frictions explain this local elasticity, separately from migration frictions. Information frictions do not appear to explain the result. Findings are consistent with migration frictions, implying encouraging investments based on national demand may increase mismatch.

Contact: Jennifer Delaney
delaneyj@illinois.edu

Sponsor: Higher Education Collaborative