Do Students Still Believe in the Graduate Premium? Macroeconomic Shock and Expected Returns to Higher Education

In knowledge-based economies, human capital formation depends not only on realised returns to education, but also on how students perceive the future value of a degree. This paper examines how a sudden macroeconomic shock affects students’ expected earnings and expected educational wage premium. We use the COVID-19 pandemic as a plausibly exogenous shock and analyse survey data from higher education students in Kraków, a major Polish academic centre and knowledge-intensive business-services hub. The core comparison is between expectations reported before the shock in 2019 and during the shock in 2021, while a 2023 wave provides supplementary evidence on the persistence of the observed changes. We distinguish between expected earnings one and five years after graduation and between earnings with tertiary and secondary education. Baseline regressions are complemented with Sorted Partial Effects to examine heterogeneity. The results show that short-run expected earnings increased, while the expected one-year educational wage premium remained broadly unchanged. In contrast, the five-year expected premium declined, indicating weaker confidence in the longer-term graduate advantage. The findings suggest that macroeconomic shocks may influence human capital formation through changes in expectations, not only through realised labour market outcomes.