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A great depression? Students' educational aspirations and investments in the aftermath of the Great Recession

Author

Listed:
  • Eleonora Porreca

    (Bank of Italy)

  • Lucia Rizzica

    (Bank of Italy)

  • Marco Tonello

    (Bank of Italy)

Abstract

We study how economic downturns shape human capital accumulation by affecting the educational aspirations of adolescents and their subsequent academic efforts and choices. Using student census data matched with administrative records, we construct an individual-level measure of exposure to local labor market conditions based on the share of school peers whose parents are unemployed. Identification relies on quasi-random variation in exposure across adjacent cohorts within the same school. We find that greater exposure to adverse business cycle conditions significantly reduces students' aspirations to pursue tertiary education and negatively affects subsequent outcomes, including high school GPA, college enrollment and dropout rates.

Suggested Citation

  • Eleonora Porreca & Lucia Rizzica & Marco Tonello, 2026. "A great depression? Students' educational aspirations and investments in the aftermath of the Great Recession," Temi di discussione (Economic working papers) 1528, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1528_26
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2026/2026-1528/en_tema_1528.pdf
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    More about this item

    Keywords

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    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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