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More education, less volatility? The effect of education on earnings volatility over the life cycle

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  • Delaney, Judith
  • Devereux, Paul

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 procyclical earnings. However, there is little evidence that education affects earnings volatility of older men.
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  • Delaney, Judith & Devereux, Paul, 2019. "More education, less volatility? The effect of education on earnings volatility over the life cycle," Papers RB201901, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:rb201902
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    3. Cummins, Neil, 2022. "The Causal Effects of Education on Age at Marriage and Marital Fertility," CEPR Discussion Papers 17398, C.E.P.R. Discussion Papers.
    4. Hamermesh, Daniel S. & Pfann, Gerard A., 2022. "The variability and volatility of sleep: An ARCHetypal behavior," Economics & Human Biology, Elsevier, vol. 47(C).
    5. Jolly, Nicholas A. & Wagner, Kathryn L., 2023. "Work-limiting disabilities and earnings volatility," Labour Economics, Elsevier, vol. 81(C).
    6. Seah, Kelvin K.C. & Pan, Jessica & Tan, Poh Lin, 2020. "Breadth of university curriculum and labor market outcomes," Labour Economics, Elsevier, vol. 65(C).
    7. Gregory Clark & Christian Alexander Abildgaard Nielsen, 2024. "The Returns to Education: A Meta-study," Working Papers 0249, European Historical Economics Society (EHES).
    8. Davies, Neil & Dickson, Matt & Smith, George Davey & Windmeijer, Frank & van den Berg, Gerard J., 2019. "The Causal Effects of Education on Adult Health, Mortality and Income: Evidence from Mendelian Randomization and the Raising of the School Leaving Age," IZA Discussion Papers 12192, Institute of Labor Economics (IZA).
    9. Lepinteur, Anthony & Nieto, Adrìan, 2021. "All about the money ? The gendered effect of education on industrial and occupational sorting," CEPREMAP Working Papers (Docweb) 2109, CEPREMAP.
    10. Schmitz, Hendrik & Tawiah, Beatrice Baaba, 2023. "Life-cycle health effects of compulsory schooling," Ruhr Economic Papers 1006, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Hofmarcher, Thomas, 2021. "The effect of education on poverty: A European perspective," Economics of Education Review, Elsevier, vol. 83(C).
    12. Patrick Bennett, 2021. "The Work-To-School Transitions:Job Displacement and Skill Upgrading among Young High School Dropouts," Working Papers 202205, University of Liverpool, Department of Economics.
    13. Ran Gu, 2023. "Human Capital and the Business Cycle Effects on the Postgraduate Wage Premium," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 48, pages 345-376, April.
    14. Patrick Baylis & Pierre‐Loup Beauregard & Marie Connolly & Nicole M. Fortin & David A. Green & Pablo Gutiérrez‐Cubillos & Samuel Gyetvay & Catherine Haeck & Tímea Laura Molnár & Gaëlle Simard‐Duplain , 2022. "The distribution of COVID‐19–related risks," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 172-213, February.
      • Patrick Baylis & Pierre-Loup Beauregard & Marie Connolly & Nicole Fortin & David A. Green & Pablo Gutierrez Cubillos & Sam Gyetvay & Catherine Haeck & Timea Laura Molnar & Gaëlle Simard-Duplain & Henr, 2020. "The Distribution of COVID-19 Related Risks," NBER Working Papers 27881, National Bureau of Economic Research, Inc.
      • Patrick Baylis & Pierre-Loup Beauregard & Marie Connolly & Nicole Fortin & David A. Green & Pablo Gutiérrez-Cubillos & Samuel Gyetvay & Catherine Haeck & Tímea L. Molnár & Gäelle Simard-Duplain & Henr, 2020. "The Distribution of COVID-19 Related Risks," CIRANO Working Papers 2020s-50, CIRANO.
    15. Gu, Ran, 2019. "Specific Human Capital and Real Wage Cyclicality: An Application to Postgraduate Wage Premium," MPRA Paper 98027, University Library of Munich, Germany.
    16. Da Zhao & Jingyuan Guo & Hong Zou & Ze Song, 2022. "From Price to Gain: The Evolution of Household Income Volatility and Consumption Insurance in Urban China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(6), pages 113-136, November.
    17. Judith M. Delaney, 2019. "Risk-adjusted returns to education," Education Economics, Taylor & Francis Journals, vol. 27(5), pages 472-487, September.
    18. Clémence Berson & Raphaël Lardeux & Claire Lelarge, 2021. "The Cognitive Load of Financing Constraints: Evidence from Large-Scale Wage Surveys," Working papers 836, Banque de France.

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    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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