The Relationship between Higher Education and Employment Opportunities in Europe

Today, it is believed that science and knowledge are the keys to a society’s development. Indeed, education is a process for individuals to gain knowledge and advance in science. As the importance of knowledge is permanently increasing, in order for the society to be successful, skilled and unemployed workforce is required for application of theoretical and academic knowledge in the workplace. With this regard, universities have the main responsibility for preparing experts for the society. On the other hand, higher education at present time cannot survive only by academic teaching to help individuals to develop mentally and spiritually. Additionally, education must guide people towards acquiring indispensable skills for economic development, to be able to exploit and manage resources, store products, and conserve them for future generations efficiently. This cause raised our curiosity to embark on performing a study about whether additional education facilities are enhancing the labor force adjustment to labor market. The data is gathered from the World Bank database. A panel data analysis is utilized including nine countries, during a time period between 1995 and 2015 that encompasses four indicators. Tertiary school enrolment (gross enrolment ratio), government expending on education (as a percentage of GDP), unemployment rate, and GDP growth (annual percentage) were our four indicators in a way that unemployment rate is considered as dependent variable and three others are regarded as independent or explanatory variables. The study focuses on Europe and differentiates between higher developed and lower developed countries across Europe, setting a criterion as Human Capital Index (HCI). Based on the results of the analyses, for higher developed countries, tertiary school enrollment and government expenditure on education have significant negative impact on unemployment rate. The major factor lowering unemployment in high HCI European countries is government expenditure on education. On the other side, in lower developed countries, tertiary school enrollment, GDP growth, and government expenditure on education have negative impact on unemployment rate; however, the correlations are not statistically significant. This outcome implies that in high HCI countries in Europe the tertiary education is better harmonized with the labor market. No such harmony is observed for lower HCI countries in Europe. Keywords: Higher Education, Employment Opportunities, Europe, Higher Developed Countries, Lower Developed Countries, HCI, Unemployment Rate, Tertiary School Enrolment, GDP Growth, Government Expenditure on Education.