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Business cycles and investment in human capital: international evidence on higher education

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  • Sakellaris, Plutarchos
  • Spilimbergo, Antonio

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.

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Bibliographic Info

Article provided by Elsevier in its journal Carnegie-Rochester Conference Series on Public Policy.

Volume (Year): 52 (2000)
Issue (Month): 1 (June)
Pages: 221-256

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Handle: RePEc:eee:crcspp:v:52:y:2000:i:1:p:221-256

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  1. Venti, Steven F. & Wise, David A., 1983. "Individual attributes and self-selection of higher education : College attendance versus college completion," Journal of Public Economics, Elsevier, vol. 21(1), pages 1-32, June.
  2. Dellas, Harris & Sakellaris, Plutarchos, 1996. "On the cyclicality of schooling: Theory and evidence," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Peter C.B. Phillips, 1995. "Impulse Response and Forecast Error Variance Asymptotics in Nonstationary VAR's," Cowles Foundation Discussion Papers 1102, Cowles Foundation for Research in Economics, Yale University.
  4. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
  5. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
  6. Flug, Karnit & Spilimbergo, Antonio & Wachtenheim, Erik, 1998. "Investment in education: do economic volatility and credit constraints matter?," Journal of Development Economics, Elsevier, vol. 55(2), pages 465-481, April.
  7. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  8. Perli, Roberto & Sakellaris, Plutarchos, 1998. "Human capital formation and business cycle persistence," Journal of Monetary Economics, Elsevier, vol. 42(1), pages 67-92, June.
  9. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
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Citations

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Cited by:
  1. Ran Abramitzky & Victor Lavy, 2011. "How Responsive is Investment in Schooling to Changes in Redistribution Policies and in Returns," NBER Working Papers 17093, National Bureau of Economic Research, Inc.
  2. Adriana Di Liberto & James Symons, 2001. "Education and Italian Regional Development," CEP Discussion Papers dp0496, Centre for Economic Performance, LSE.
  3. Francois, P. & Lloyd-Ellis, H., 2001. "Animal Spirits Meets Creative Destruction," Discussion Paper 2001-36, Tilburg University, Center for Economic Research.
  4. Bedard, Kelly & Herman, Douglas A., 2008. "Who goes to graduate/professional school? The importance of economic fluctuations, undergraduate field, and ability," Economics of Education Review, Elsevier, vol. 27(2), pages 197-210, April.
  5. David N. DeJong & Beth F. Ingram, 2001. "The Cyclical Behavior of Skill Acquisition," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(3), pages 536-561, July.
  6. Dang, Jing & Gillman, Max & Kejak, Michal, 2011. "Real Business Cycles with a Human Capital Investment Sector and Endogenous Growth: Persistence, Volatility and Labor Puzzles," Cardiff Economics Working Papers E2011/8, Cardiff University, Cardiff Business School, Economics Section.
  7. Keith Blackburn & Dimitrios Varvarigos, 2008. "Human capital accumulation and output growth in a stochastic environment," Economic Theory, Springer, vol. 36(3), pages 435-452, September.
  8. A. Di Liberto, 2004. "Convergence clubs and the role of human capital in Spanish Regional Growth," Working Paper CRENoS 200418, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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