Educational Development and Labour Markets

For over a century and a half, there have been cyclical phases ofsaturation and shortage in the numbers of students enrolled at German and Prussian universities. Starting from thisobservations, this article constructs a neoclassical glutting theory. A two-fold hypothesis is put forward. Firstly,the behaviour of students in their choice of curriculum depends on the expected rewards. Indeed, the allocation of studentsto the various faculties depends on the comparative yields of the latter in terms of expected earnings and job availabilityin the corresponding professional sectors. Thus, the rewards expected by a student are represented by the earnings on thelabour market at a given moment and that he or she considers to be sustainable in time. Secondly, an attraction phenomenonmay appear for certain curricula when a shortage occurs in different professional sectors. Once the shortagehas been made up, the demand effect continues as a result of delay in the perception of the situation by young people.This may gradually lead to comparative over-production of qualifieduniversity leavers. This unbalanced situation diverts new cohorts ofstudents to other sectors ofeducation and may cause a new shortage, finally resulting in acyclical movement modulated according to job availability.