Abstract:

Research suggests that higher education promotes economic and social development. At the individual level, more education is also viewed as a source of personal improvement and a means to attaining a better remunerated and more fulfilling professional life. Recognition of the relevance of tertiary education in a knowledge based global economy, has led many countries to establish ambitious goals for 2020. The US aim at becoming the country with the highest proportion of 25-34 year old university graduates, the EU has the objective of increasing the percentage of 30-34 year-olds with complete tertiary education by at least 40% in each member country, and China’s objective is for 20% of its population to have a higher education degree.
The peripheral EU countries may find the 2020 goal difficult to attain. Notwithstanding the strategic importance of increasing domestic ‘talent pools’, the current context of economic crisis, budgetary contingency and high unemployment may exert conflicting effects upon domestic demand for higher education. The decision to continue studying after secondary school generally postpones entry in the job market for a few years. Therefore, the objective of increasing the number of graduates requires that personal and societal preferences favor tertiary education and that enough resources are available to support such inclination. With constant pressures to reduce government budget deficits and debts and unprecedented cuts on families’ incomes, financing higher education is an ever bigger challenge. High rates of youth and graduate unemployment and the recent attempts of regaining competitiveness by cutting salaries are also sending mixed signals to young people of university age. On the one hand, prolonging education may be a good option when it is difficult to find a job. On the other hand, the perspective of spending three or four years in a higher education institution may seem less appealing with a shrinking wage premium.
The current circumstances increase the utility of studies investigating demand for higher education, its main determinants and the nature of their impact. Such knowledge may help institutions manage scarce resources and may also improve the efficiency of policy measures designed to sustain demand for higher education in countries more seriously restricted by the current political and economic conjuncture. In this study we investigate demand for higher education in Portugal using data from the national centralized system of applications. Modeling demand is a challenging task, as personal decisions are subject to many distinct influences. Rather than making an ad hoc choice of a few variables that are apt to be more relevant, we adopt the partial least squares (PLS) methodology, which is robust in modeling with many variables even with relatively few observations. PLS allows the development of exploratory analyses to identify the relevant determinants of demand, the assessment of their importance to explain demand and the nature of their impacts upon it.

Keywords:

Demand for higher education, enrollments.