I do not find losses caused by displacement for the whole sample. I develop a model of university enrollment and job search that helps to understand the differences between the two countries. For Italy, I identify two main groups of dropouts.
Misguided students are ill-prepared to obtain an academic degree.
Parking lot students drop out as soon as they get the first suitable job offer but obtain a degree in case they never get a job offer throughout their studies. In Germany, only misguided dropouts exist, and there are fewer of them than in Italy. We argue that 'place of childhood' as a proxy of schooling infrastructure is a convincing exogenous source of variation in schooling levels that allows us to identify the causal effect of schooling for well-defined subgroups of the population. Their response is further most pronounced at low schooling levels whereas the response of individuals with 'rich family background' is most pronounced at higher schooling levels. Finally, this approach allows us to detect changes in the response function over time.