The impact of the establishment of a university in a peripheral region on the local labour market for graduates

University establishments have become a common policy instrument to revitalize peripheral regions. By introducing a supplier of highly skilled graduates, firms in these regions get the access to human capital that is crucial for their development. However, it can turn out to be a cathedral in the dessert. Furthermore, graduates can feel forced in the absence of labour market demand to take a job below their skill level. To date there are just a few studies covering the mobility of younger universities, and these studies are limited to studying only mobility at one point in time. The importance that university establishments have as instrument to revitalize peripheral regions asks for detailed exploration of these dynamics.

The empirical analysis takes the form of a quantitative case study at the establishment of Aalborg University in 1974 in the North Denmark region. Although the wage analysis indicated some slight differences in the intra-regional graduate wages, they are negligible when taking the costs of living into consideration. Furthermore, the retention rates of both local and incoming graduates have been stable over the last few decades, which implies in a context of fast rising graduate numbers an increasing absorbance of graduates. Over time, this development resulted in an increased share of graduates in the workforce of the Aalborg labour market, whose relative growth outpaces that of the other urbanized labour markets in Denmark. Therefore, we can conclude that the economy of a peripheral economy can adapt to and benefit from the establishment of a university.