Business Cycles and Investment in Human Capital: International Evidence on Higher Education

40 Pages Posted: 13 Dec 1999

See all articles by Plutarchos Sakellaris

Plutarchos Sakellaris

University of Maryland - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

Date Written: September 1999

Abstract

We study the effect of economic fluctuations on investment in higher education for a wide range of countries. Our main focus is foreign students who come to the United States to attend university. There is a strong relation between enrollment and the business cycle in the sending country. The cyclical pattern of enrollment is sharply different for two groups of countries. For OECD countries enrollment is countercyclical, whereas for non-OECD countries it is procyclical. At business cycle frequencies, opportunity cost plays a dominant role in explaining enrollment from OECD countries, whereas ability to pay and credit constraints seem more prevalent at non-OECD countries. The results are confirmed using data on domestic enrollment from national sources.

JEL Classification: E32, O15, F2

Suggested Citation

Sakellaris, Plutarchos and Spilimbergo, Antonio, Business Cycles and Investment in Human Capital: International Evidence on Higher Education (September 1999). Available at SSRN: https://ssrn.com/abstract=188048 or http://dx.doi.org/10.2139/ssrn.188048

Plutarchos Sakellaris (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6346 (Phone)
202-623-6336 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute ( email )

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

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