The Effect of Business Cycles on Educational Attainment

19 Pages Posted: 16 Jul 2013  

Ernest Boffy-Ramirez

University of Colorado at Denver

Benjamin Hansen

University of Oregon - Department of Economics; NBER; IZA

Hani Mansour

University of Colorado at Denver - Department of Economics

Date Written: May 13, 2013

Abstract

This paper studies the impact of fluctuations in unemployment rates before high school graduation, at age 17, on educational attainment. We hypothesize that schooling decisions are counter-cyclical, but that the impact of higher unemployment rates varies over the ability distribution, as measured by the Armed Forces Qualifying Test (AFQT). Using data from the 1979 National Longitudinal Study of Youth (NLSY79), combined with information on national unemployment rates, we find support for this hypothesis. Specifically, we find that higher unemployment rates at age 17 increase completed years of education and the probability of college graduation for individuals in the 60th-80th quintile of the AFQT distribution. We find no evidence that higher unemployment rates are related to the probability of high school graduation.

Keywords: human capital accumulation, unemployment, business cycles, ability

JEL Classification: I2, J6, E2

Suggested Citation

Boffy-Ramirez, Ernest and Hansen, Benjamin and Mansour, Hani, The Effect of Business Cycles on Educational Attainment (May 13, 2013). Available at SSRN: https://ssrn.com/abstract=2294146 or http://dx.doi.org/10.2139/ssrn.2294146

Ernest Boffy-Ramirez

University of Colorado at Denver ( email )

Box 173364
1250 14th Street
Denver, CO 80217
United States

Benjamin Hansen (Contact Author)

University of Oregon - Department of Economics ( email )

1285 University of ORegon
Eugene, OR 97403
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Hani Mansour

University of Colorado at Denver - Department of Economics ( email )

Campus Box 181
P.O. Box 173364
Denver, CO 80218
United States

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