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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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  • Sakellaris, Plutarchos & Spilimbergo, Antonio, 2000. "Business cycles and investment in human capital: international evidence on higher education," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 52(1), pages 221-256, June.
  • Handle: RePEc:eee:crcspp:v:52:y:2000:i:1:p:221-256
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    Cited by:

    1. Malik Fahim Bashir & Changsheng Xu & Khalid Zaman & Ghulam Akhmat, 2014. "Key Factors Determining the Rationale for Brain Drain: An Irony Never Recovered," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(8), pages 308-320, August.
    2. Jing Dang & Max Gillman & Michal Kejak, 2011. "Real Business Cycles with a Human Capital Investment Sector and Endogenous Growth: Persistence, Volatility and Labor Puzzles," IEHAS Discussion Papers 1128, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    3. John P. Conley & Ali Sina Önder & Benno Torgler, 2012. "Are all High-Skilled Cohorts Created Equal? Unemployment, Gender, and Research Productivity," Working Papers 2012.86, Fondazione Eni Enrico Mattei.
    4. 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.
    5. Fabio Méndez & Facundo Sepúlveda, 2012. "The Cyclicality of Skill Acquisition: Evidence from Panel Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 128-152, July.
    6. Blom, Erica & Cadena, Brian C. & Keys, Benjamin J., 2015. "Investment over the Business Cycle: Insights from College Major Choice," IZA Discussion Papers 9167, Institute for the Study of Labor (IZA).
    7. Keith Blackburn & Dimitrios Varvarigos, 2008. "Human capital accumulation and output growth in a stochastic environment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 36(3), pages 435-452, September.
    8. 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.
    9. 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.
    10. Gilpin, Gregory A. & Saunders, Joseph & Stoddard, Christiana, 2015. "Why has for-profit colleges’ share of higher education expanded so rapidly? Estimating the responsiveness to labor market changes," Economics of Education Review, Elsevier, vol. 45(C), pages 53-63.
    11. Di Liberto, Adriana, 2008. "Education and Italian regional development," Economics of Education Review, Elsevier, vol. 27(1), pages 94-107, February.
    12. Francois, P. & Lloyd-Ellis, H., 2001. "Animal Spirits Meets Creative Destruction," Discussion Paper 2001-36, Tilburg University, Center for Economic Research.
    13. Ran Abramitzky & Victor Lavy, 2014. "How Responsive Is Investment in Schooling to Changes in Redistributive Policies and in Returns?," Econometrica, Econometric Society, vol. 82(4), pages 1241-1272, July.
    14. Maskus, Keith & Mobarak, Ahmed Mushfiq & Stuen, Eric T., 2010. "Skilled Immigration and Innovation: Evidence from Enrollment Fluctuations in U.S. Doctoral Programs," CEPR Discussion Papers 7709, C.E.P.R. Discussion Papers.
    15. Diana Alessandrini & Stephen Kosempel & Thanasis Stengos, 2012. "The Business Cycle Human Capital Accumulation Nexus and its Effect on Labor Supply Volatility," Working Paper series 62_12, Rimini Centre for Economic Analysis.
    16. Bradley, Elizabeth S., 2012. "The Effect of the Business Cycle on Freshman Major Choice," MPRA Paper 42412, University Library of Munich, Germany.
    17. Keith Blackburn & Dimitrios Varvarigos, 2006. "Human Capital Accumulation in a Stochastic Environment: Some New Results on the Relationship Between Growth and Volatility," The School of Economics Discussion Paper Series 0618, Economics, The University of Manchester.
    18. Diana Alessandrini, 2014. "On the Cyclicality of Schooling Decisions: Evidence from Canadian Data," Working Paper series 16_14, Rimini Centre for Economic Analysis.
    19. Chellaraj, Gnanaraj & Maskus, Keith E. & Mattoo, Aaditya, 2005. "The contribution of skilled immigration and international graduate students to U.S. innovation," Policy Research Working Paper Series 3588, The World Bank.
    20. Jones, Larry E. & Manuelli, Rodolfo E., 2005. "Neoclassical Models of Endogenous Growth: The Effects of Fiscal Policy, Innovation and Fluctuations," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 1, pages 13-65 Elsevier.
    21. Dimitrios Varvarigos, 2013. "Endogenous Cycles and Human Capital," Discussion Papers in Economics 13/18, Department of Economics, University of Leicester.
    22. 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.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • F2 - International Economics - - International Factor Movements and International Business

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