Abstract 

Does expanding access to higher education foster local economic activity? This paper uses the large-scale expansion of universities in France during the 1990s to estimate the local impact of new colleges on cities, firms, and individuals. Exploiting the staggered construction of hundreds of colleges in an event-study design, I find that the increase in local human capital spurred business dynamism. Over the subsequent decade, firm creation rose by 10% on average -- particularly in skill-intensive industries. This surge in entry came at the expense of incumbent firms, which experienced slower growth and increased exit. On net, these cities experienced higher growth, with a 3% rise in value-added. These gains were concentrated among young workers, who experienced an increase in skilled employment, while employment of older workers declined. In the long run, cohorts exposed to new colleges during school age attained higher levels of education, were more likely to be employed, and held more skilled jobs 25 years later. Taken together, these results show that the expansion of higher education can generate new and lasting opportunities for local populations, albeit at transitory costs for some groups.