More Education, Less Volatility? The Effect of Education on Earnings Volatility Over the Life Cycle

48 Pages Posted: 13 Nov 2017

See all articles by Judith Delaney

Judith Delaney

Economic and Social Research Institute (ESRI)

Paul J. Devereux

University College Dublin - Department of Economics; IZA Institute of Labor Economics

Abstract

Much evidence suggests that having more education leads to higher earnings in the labor market. However, there is little evidence about whether having more education causes employees to experience lower earnings volatility or shelters them from the adverse effects of recessions. We use a large British administrative panel data set to study the impact of the 1972 increase in compulsory schooling on earnings volatility over the life cycle. Our estimates suggest that men exposed to the law change subsequently had lower earnings variability and less pro-cyclical earnings. However, there is little evidence that education affects earnings volatility of older men.

Keywords: return to education, earnings volatility

JEL Classification: I26, J01

Suggested Citation

Delaney, Judith and Devereux, Paul J., More Education, Less Volatility? The Effect of Education on Earnings Volatility Over the Life Cycle. IZA Discussion Paper No. 11107, Available at SSRN: https://ssrn.com/abstract=3069450 or http://dx.doi.org/10.2139/ssrn.3069450

Judith Delaney (Contact Author)

Economic and Social Research Institute (ESRI) ( email )

Whitaker square Sir john Rogerson's Quay
Dublin 2
Dublin
Ireland

Paul J. Devereux

University College Dublin - Department of Economics ( email )

Belfield
Dublin 4, 4
Ireland

IZA Institute of Labor Economics

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

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