Does Education Prevent Job Loss During Downturns? Evidence from Exogenous School Assignments and Covid-19 in Barbados

31 Pages Posted: 13 Sep 2021 Last revised: 18 Sep 2021

See all articles by Diether W. Beuermann

Diether W. Beuermann

University of Maryland - College Park; Durham Business School; Inter-American Development Bank (IADB); Universidad de Lima - Facultad de Economia

Nicolas L. Bottan

Cornell University - Department of Policy Analysis and Management

Bridget Hoffmann

Inter-American Development Bank

C. Kirabo Jackson

Northwestern University

Diego Vera Cossio

Inter-American Development Bank

Date Written: September 2021

Abstract

Canonical human capital theories posit that education, by enhancing worker skills, reduces the likelihood that a worker will be laid-off during times of economic change. Yet, this has not been demonstrated causally. We link administrative education records from 1987 through 2002 to nationally representative surveys conducted before and after COVID-19 onset in Barbados to explore the causal impact of improved education on job loss during this period. Using a regression discontinuity (RD) design, Beuermann and Jackson (2020) show that females (but not males) who score just above the admission threshold for more selective schools in Barbados attain more years of education than those that scored just below (essentially holding initial ability fixed). Here, in follow-up data, we show that these same females (but not males) are much less likely to have lost a job after the onset of COVID-19. We show that these effects are not driven by sectoral changes, or changes in labor supply. Because employers observe incumbent worker productivity, these patterns are inconsistent with pure education signalling, and suggest that education enhances worker skill.

Suggested Citation

Beuermann, Diether Wolfgang and Bottan, Nicolas Luis and Hoffmann, Bridget and Jackson, C. Kirabo and Vera Cossio, Diego, Does Education Prevent Job Loss During Downturns? Evidence from Exogenous School Assignments and Covid-19 in Barbados (September 2021). NBER Working Paper No. w29231, Available at SSRN: https://ssrn.com/abstract=3922505

Diether Wolfgang Beuermann (Contact Author)

University of Maryland - College Park ( email )

College Park, MD 20742
United States
240-838-9376 (Phone)

HOME PAGE: http://www.econ.umd.edu/~beuermann

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

HOME PAGE: http://www.dur.ac.uk/dbs

Inter-American Development Bank (IADB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States
202-623-2172 (Phone)

HOME PAGE: http://www.iadb.org

Universidad de Lima - Facultad de Economia ( email )

Av. Javier Prado Este s/n
Lima, Lima 33
Peru

HOME PAGE: http://www.ulima.edu.pe

Nicolas Luis Bottan

Cornell University - Department of Policy Analysis and Management ( email )

Ithaca, NY
United States
6072555724 (Phone)

HOME PAGE: http://https://www.nicolasbottan.com

Bridget Hoffmann

Inter-American Development Bank ( email )

1300 New York Ave., NW
Washington, DC 20577
United States

C. Kirabo Jackson

Northwestern University ( email )

Diego Vera Cossio

Inter-American Development Bank

1300 New York Ave NW
Washington, DC 20577
United States

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