Taxi drivers with a PhD: trickle down or crowding-out for lower educated workers in Dutch cities?

Attracting higher educated workers is often seen as a means to stimulate employment in cities in general, leading to lower unemployment for the lower educated, the ‘trickle-down’ effect. However, lower educated workers may also experience crowding-out effects if these higher educated inhabitants accept jobs below their educational level. Based on an empirical analysis of a cross-section of Dutch cities, we find that these crowding-out effects indeed seem to occur. This implies that a trickle-down strategy cannot be seen as a panacea by urban policymakers for the problem of high unemployment amongst lower educated workers.