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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 pro-cyclical earnings. However, there is little evidence that education affects earnings volatility of older men.
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Suggested Citation

  • 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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    Cited by:

    1. Markus Gehrsitz & Morgan C. Williams, "undated". "The Effects of Compulsory Schooling on Health and Hospitalization over the Life Cycle," Working Papers 2303, University of Strathclyde Business School, Department of Economics, revised May 2020.
    2. Luo, Jigang & Wang, Zhen & Wu, Maohua, 2021. "Effect of place-based policies on the digital economy: Evidence from the Smart City Program in China," Journal of Asian Economics, Elsevier, vol. 77(C).
    3. Cummins, Neil, 2022. "The causal effects of education on age at marriage and marital fertility," Economic History Working Papers 115400, London School of Economics and Political Science, Department of Economic History.
    4. Jolly, Nicholas A. & Wagner, Kathryn L., 2023. "Work-limiting disabilities and earnings volatility," Labour Economics, Elsevier, vol. 81(C).
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    6. Clark, Gregory & Nielsen, Christian Alexander Abildgaard, 2024. "The Returns to Education: A Meta-study," CEPR Discussion Papers 18769, C.E.P.R. Discussion Papers.
    7. Cummins, Neil, 2025. "The causal effects of education on age at marriage and marital fertility," LSE Research Online Documents on Economics 126514, London School of Economics and Political Science, LSE Library.
    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, Adrián, 2025. "All about the money? The gendered effect of education on industrial and occupational sorting," Labour Economics, Elsevier, vol. 92(C).
    10. Hugo Reis & Joop Hartog & Pedro Raposo, 2024. "Risk and heterogeneity in benefits from vocational versus general secondary education: estimates for early and mature career stages," Working Papers w202405, Banco de Portugal, Economics and Research Department.
    11. Hamermesh, Daniel S. & Pfann, Gerard A., 2022. "The variability and volatility of sleep: An ARCHetypal behavior," Economics & Human Biology, Elsevier, vol. 47(C).
    12. 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.
    13. Hofmarcher, Thomas, 2021. "The effect of education on poverty: A European perspective," Economics of Education Review, Elsevier, vol. 83(C).
    14. Patrick Bennett, 2021. "The Work-To-School Transition: Job Displacement and Skill Upgrading among Young High School Dropouts," CESifo Working Paper Series 9417, CESifo.
    15. d’Astous, Philippe & Shore, Stephen H., 2024. "Programs of study and earnings dynamics," Labour Economics, Elsevier, vol. 88(C).
    16. 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.
    17. Teresa Barbieri & Vito Peragine & Michele Raitano, 2025. "The effect of education on earnings dynamics: evidence from Italy," SERIES 03-2025, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Oct 2025.
    18. Gu, Ran, 2019. "Specific Human Capital and Real Wage Cyclicality: An Application to Postgraduate Wage Premium," MPRA Paper 98027, University Library of Munich, Germany.
    19. 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.
    20. Afonso Câmara, 2024. "Too young to quit school? Increasing the compulsory schooling leaving age and students’ educational paths," Working Papers hal-04829754, HAL.
    21. 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.
    22. Judith M. Delaney, 2019. "Risk-adjusted returns to education," Education Economics, Taylor & Francis Journals, vol. 27(5), pages 472-487, September.
    23. 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.

    More about this item

    JEL classification:

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

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