Should the government stimulate enrolment in science and engineering studies?

Noailly, Joëlle ; Webbink, Dinand ; Jacobs, Bas

In: Applied Economics Letters. - Vol. 18(2011), No. 4, p. 371-375

Abstract: In many countries there is a deep concern about shortages of Science and Engineering workers (S&E). This article focuses on the effectiveness of policies aimed at stimulating the supply of S&E workers in the Netherlands. Despite the 'common wisdom' of severe and increasing shortages, we do not find evidence for a tight labour market of S&E workers. Instead, the data suggest that S&E workers have become less scarce since 1996. Stimulating enrolment in S&E studies may not be an effective policy for increasing R&D activity in the Netherlands because the majority of Dutch S&E freshmen do not end up working in R&D. They drop out during their S&E study or choose other jobs. In addition, the internationalization of the market for S&E workers tends to counter the effects of supply-side policies because the growing supply of foreign S&E graduates puts downward pressure on wages. As a result, demand-side policies may be more effective because they are directly targeted at fostering R&D.

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