The regional economic impact of more graduates in the labour market: a 'micro-to-macro' analysis for Scotland

Kristinn Hermannsson, Katerina Lisenkova, Patrizio Lecca, J Kim Swales, Peter G McGregor

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12 Citations (Scopus)
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This paper explores the system-wide impact of graduates on the regional economy. Graduates enjoy a significant wage premium, often interpreted as reflecting their greater productivity relative to nongraduates. If this is so there is a clear and direct supply-side impact of higher education institution (HEI) activities on regional economies. We use an HEI-disaggregated computable general equilibrium model of Scotland to estimate the impact of the growing proportion of graduates in the Scottish labour force that is implied by the current participation rate and demographic change, taking the graduate wage premium in Scotland as an indicator of productivity enhancement. While the detailed results vary with alternative assumptions about the extent to which wage premia reflect productivity, they do suggest that the long-term supply-side impacts of HEIs provide a significant boost to regional GDP. Furthermore, the results suggest that the supply-side impacts of HEIs are likely to be more important than the expenditure impacts that are the focus of most HEI impact studies.
Original languageEnglish
Pages (from-to)471-487
Number of pages17
JournalEnvironment and Planning A
Issue number2
Publication statusPublished - Feb 2014


  • regional
  • economic impact
  • graduates
  • labour market
  • scotland
  • micro-to-macro
  • analysis
  • supply-side impact
  • higher education institutions
  • computable general equilibrium model


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