The Indirect Effects of Educational Expansions: Evidence from a Large Enrollment Increase in University Majors

Increasing access to education may have consequences that go beyond effects on marginal students encouraged to enroll. It may change peer effects, school quality, and returns to skill. This paper studies how classmates and teaching inputs affect learning of university students, exploiting an educational expansion in Italian STEM majors. Newly collected data on 27, 236 students indicate that less prepared classmates and congestion of teaching resources lowered learning of incumbent students in STEM fields. Their learning, however, increased in courses in which the new classmates raised average preparedness. These effects might have had long-lasting consequences on the returns to STEM degrees.