The Effect of Increasing Education Efficiency on University Enrollment

Abstract

We examine the consequences of compressing secondary schooling for university enrollment. An unusual education reform in Germany reduced the length of academic high school while simultaneously increasing the instruction hours in the remaining years. Accordingly, students receive the same amount of schooling but over a shorter period of time. Based on a difference-in-differences approach and using administrative data on all students in Germany, we find that this reform decreased university enrollment rates. Moreover, students are more likely to delay their enrollment, to drop out of university, and to change their major. We discuss supply-side restrictions, age differences, and increased workload during school as potential mechanisms and present back-of-the-envelope cost–benefit considerations showing that the earnings gain from an extended labor market participation may still offset the adverse effects presented in this study.