Free Movement of Workers and Native Demand for Tertiary Education

Abstract

We investigate how natives’ demand for tertiary education responds to a reform that relaxed employment restrictions for foreign workers in Switzerland. The policy change led to a sharp increase in cross-border commuting into Swiss areas close to the border. We find that enrollment in universities with a focus on applied studies rises in affected commuting zones, and this increase is driven by natives with a vocational background. Enrollment rises mostly in non-STEM fields that foster skills less transferable across countries. We show that enrollment results are consistent with a rising wage premium for tertiary non-STEM degrees.