Countercyclical college enrollment is a stylized fact in economics. However, most empirical evidence stems from countries with high college costs and volatile outside options. This study uses German administrative data to estimate the effect of within-region across-time variation in labor demand at high school graduation on postsecondary education. In contrast to consensus estimates, higher local unemployment rates decrease first-time college-going. Instead of attending a classic university, more graduates enroll at applied colleges or start an apprenticeship. The results imply that under stable outside options, recessions can cause a shift towards investment in applied skills.

Using detailed data from a unique survey of high school graduates in Germany, we document a gender gap in expected full-time earnings of more than 15%. We decompose this early gender gap and find that especially differences in coefficients help explain different expectations. In particular, the effects of having time for family as career motive and being first-generation college student are associated with large penalties in female wage expectations exclusively. This is especially true for higher expected career paths. Resulting expected returns to education are associated with college enrollment of women and could thus entrench subsequent gaps in realized earnings.

Following a landmark court ruling in 2005, more than half of Germany’s universities started charging tuition fees, which were later abolished in a staggered manner. We exploit the fact that even students who were already enrolled had to start paying fees. We show that fees increase study effort and degree completion among these students. However, fees also decrease first-time university enrollment among high school graduates. Combining this enrollment impact with the effect on completion, we find that fees around the zero-price margin have only little effect on overall educational attainment. We conclude by discussing policies targeting the separate effect margins of fees and caution against a general abolition.