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Tight labor markets and the demand for education: Evidence from the coal boom and bust

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  • Dan A. Black
  • Terra G. McKinnish
  • Seth G. Sanders

Abstract

Human capital theory predicts that individuals acquire less schooling when the returns to schooling are small. To test this theory, the authors study the effect of the Appalachian coal boom on high school enrollments. During the 1970s, a boom in the coal industry increased the earnings of high school dropouts relative to those of graduates. During the 1980s, the boom subsided and the earnings of dropouts declined relative to those of graduates. The authors find that high school enrollment rates in Kentucky and Pennsylvania declined considerably in the 1970s and increased in the 1980s in coal-producing counties relative to counties without coal. The estimates indicate that a long-term 10% increase in the earnings of low-skilled workers could decrease high school enrollment rates by as much as 5-7%--a finding with implications for policies aimed at improving low-skilled workers' employment and earnings, such as wage subsidies and minimum wage increases. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 59 (2005)
Issue (Month): 1 (October)
Pages: 3-16

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Handle: RePEc:ilr:articl:v:59:y:2005:i:1:p:3-16

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Cited by:
  1. Bjarne Strøm & Torberg Falch & Päivi Lujala, 2011. "Geographical constraints and educational attainment," Working Paper Series 11811, Department of Economics, Norwegian University of Science and Technology.
  2. Montiel, Peter J. & Serven, Luis, 2008. "Real exchange rates, saving and growth : is there a link ?," Policy Research Working Paper Series 4636, The World Bank.
  3. Steven McMullen, 2011. "How do Students Respond to Labor Market and Education Incentives? An Analysis of Homework Time," Journal of Labor Research, Springer, vol. 32(3), pages 199-209, September.
  4. Lee, Chanyoung & Orazem, Peter F., 2010. "High school employment, school performance, and college entry," Economics of Education Review, Elsevier, vol. 29(1), pages 29-39, February.
  5. Aitor Lacuesta & Sergio Puente & Ernesto Villanueva, 2011. "The schooling response to a sustained increase in low-skill wages: evidence from Spain 1989-2009," Banco de Espa�a Working Papers 1208, Banco de Espa�a.
  6. Torberg Falch & Bjarne Stroem, 2008. "Student progression in upper secondary education: The effect of academic ability, gender, and schools," Working Paper Series 9708, Department of Economics, Norwegian University of Science and Technology.
  7. Richard J. Murnane, 2013. "U.S High School Graduation Rates: Patterns and Explanations," NBER Working Papers 18701, National Bureau of Economic Research, Inc.

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