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On the cyclicality of schooling: Theory and evidence

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Author Info
Dellas, Harris (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
Sakellaris, Plutarchos (University of Maryland)

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Abstract

Economic theory indicates that opportunity-cost considerations tend to make schooling countercyclical whereas ability-to-pay considerations have the opposite effect. We examine the college enrollment decisions of individuals using the Current Population Survey and find that their propensity to enroll is countercyclical. There seems to be significant substitution during the business cycle between human capital investment and competing economic activities. The decision to enroll in college is related strongly to labor market conditions (measured by the state-level unemployment rate and earnings) and to the real interest rate. Furthermore, there are significant differences across demographic groups.

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Publisher Info
Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1997002.

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Length: 45
Date of creation: 01 Sep 1996
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Handle: RePEc:ctl:louvir:1997002

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Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-87, December. [Downloadable!] (restricted)
    Other versions:
  3. Drazen, Allan, 1985. "Cyclical Determinants of the Natural Level of Economic Activity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(2), pages 387-97, June. [Downloadable!] (restricted)
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  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. [Downloadable!] (restricted)
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  13. Orazem, Peter F & Mattila, J Peter, 1991. "Human Capital, Uncertain Wage Distributions, and Occupational and Educational Choices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 103-22, February. [Downloadable!] (restricted)
  14. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
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  15. Katharine G. Abraham & John C. Haltiwanger, 1995. "Real Wages and the Business Cycle," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1215-1264, September. [Downloadable!] (restricted)
  16. Solon, Gary & Barsky, Robert & Parker, Jonathan A, 1994. "Measuring the Cyclicality of Real Wages: How Important Is Composition Bias?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 1-25, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!] (restricted)
  2. Lance Lochner, 2004. "Education, Work, and Crime: A Human Capital Approach," NBER Working Papers 10478, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Dimitrios Varvarigos, 2006. "On stabilisation policy: Are there conflicting implications for growth and welfare?," Discussion Paper Series 2006_19, Department of Economics, Loughborough University, revised Jul 2006. [Downloadable!]
  4. Francois, P. & Lloyd-Ellis, H., 2001. "Animal spirits meets creative destruction," Discussion Paper 36, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  5. Gadi Barlevy & Daniel Tsiddon, 2004. "Earnings inequality and the business cycle," Working Paper Series WP-04-08, Federal Reserve Bank of Chicago. [Downloadable!]
    Other versions:
  6. K Blackburn & D Varvarigos, 2006. "Human Capital Accumulation in a Stochastic Environment: Some New Results on the Relationship Between Growth and Volatility," Centre for Growth and Business Cycle Research Discussion Paper Series 74, Economics, The Univeristy of Manchester. [Downloadable!]
  7. Stuart J. Fowler & Eric R. Young, 2004. "The Acquisition of Skills over the Life-Cycle," Working Papers 200402, Middle Tennessee State University, Department of Economics and Finance. [Downloadable!]
  8. Skoufias, Emmanual & Parker, Susan W., 2002. "Labor market shocks and their impacts on work and schooling," FCND discussion papers 129, International Food Policy Research Institute (IFPRI). [Downloadable!]
    Other versions:
  9. Plutarchos Sakellaris & Antonio Spilimbergo, 1999. "Business Cycles and Investment in Human Capital: International Evidence on Higher Education," Electronic Working Papers 99-009, University of Maryland, Department of Economics. [Downloadable!]
    Other versions:
  10. Gadi Barlevy, 2004. "On the Timing of Innovation in Stochastic Schumpeterian Growth Models," NBER Working Papers 10741, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Gallice, Andrea, 2007. "Education, Dynamic Signaling and Social Distance," Discussion Papers in Economics 1364, University of Munich, Department of Economics. [Downloadable!]
    Other versions:
  12. Dolores Messer & Stefan C. Wolter, 2007. "Time-to-Degree and the Business Cycle," IZA Discussion Papers 2787, Institute for the Study of Labor (IZA). [Downloadable!]
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