Economic Incentives and the Demand for Higher Education

To what extent do economic incentives affect the demand for higher education? This question is addressed by means of a time-series analysis of the demand for university education in Sweden. The bulk of the variation in the fraction of qualified individuals enrolled at universities is attributed to fluctuations in the university wage premium. Furthermore, relative employment prospects for university graduates and variations in the generosity of the study allowance scheme appear to be of importance for the enrollment decision.