Job Market Signalling in the European labour market : Exploring the relationship between tertiary education access and participation in secondary level schooling.

Abstract: This study re-examines a theoretical scenario introduced by Kelly Bedard in which increased university access leads to an increase in high school dropouts due to the decreased wage premium of a high school diploma caused by talent departing to higher education. The goal for this empirical study is to expand upon the theoretical framework introduced by Bedard in order to determine whether job market signalling is present in the European labour market. In line with Bedard, we theorise that if signalling holds true, secondary education graduates will decrease when access to tertiary education increases. To test this we construct 3 linear regression models to analyse a panel data set constructed of data gathered by Eurostat. Our research question is: Does increased enrolment in tertiary education have a negative effect on participation in secondary education? Our results differ from earlier studies as they indicate that increased enrolment in European tertiary education correlates with increased participation in secondary education. Ergo, we do not prove the presence of signalling in the European labour market. Our results support continued policy efforts with the aim of increasing participation at all levels of education as we find no evidence of a trade-off between university access and secondary schooling graduate rates.