The Differential Economic Effects of Private Universities in Urban and Rural Regions

Abstract

We investigate whether the local economic effects of niche university actors depend on regional context. Focusing on private university campuses in Germany, we exploit their staggered foundation between 1990 and 2020 and estimate their effects using a conditional staggered difference-in-differences design at the postal-code level. Campus foundations raise local economic activity, but only gradually, with effects becoming statistically significant after about ten years. The effects are strongest in rural and intermediate regions, while urban regions show no significant effects. This pattern supports our argument that niche universities have greater potential to become significant actors in institutionally thinner rural regions.