A Lost Generation? Education Decisions and Employment Outcomes During the U.S. Housing Boom-Bust Cycle of the 2000s

14 Pages Posted: 26 Apr 2016

See all articles by Alexander A. Popov

Alexander A. Popov

European Central Bank (ECB)

Luc Laeven

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

Date Written: April 25, 2016

Abstract

We exploit regional variation in US house price fluctuations during the boom-bust cycle of the 2000s to study the impact of the housing cycle on young Americans’ choices related to education and employment. We find that in MSAs which experienced large increases in house prices between 2001 and 2006, young adults were substantially more likely to forego a higher education and join the workforce, lowering skill formation. During the bust years, the young, especially those without higher education, were more likely to be unemployed in areas which experienced higher declines in house prices.

Keywords: House prices, booms, education, unemployment

JEL Classification: E32, G21, J10, R21

Suggested Citation

Popov, Alexander A. and Laeven, Luc A., A Lost Generation? Education Decisions and Employment Outcomes During the U.S. Housing Boom-Bust Cycle of the 2000s (April 25, 2016). ECB Working Paper No. 1892, Available at SSRN: https://ssrn.com/abstract=2769968

Alexander A. Popov (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Luc A. Laeven

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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