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Does Education Prevent Job Loss during Downturns?: Evidence from Exogenous Schools Assignments and COVID-19 in Barbados

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  • Beuermann, Diether
  • Bottan, Nicolas L.
  • Hoffmann, Bridget
  • Jackson, C. Kirabo
  • Vera-Cossio, Diego A.

Abstract

Canonical human capital theories posit that education, by enhancing worker skills, reduces the likelihood that a worker will be laid off during times of economic change. Yet, this has not been demonstrated causally. We link administrative education records from 1987 through 2002 to nationally representative surveys conducted before and after the onset of COVID-19 in Barbados to explore the causal impact of improved education on job loss during this period. Using a regression discontinuity (RD) design, Beuermann and Jackson (2020) show that females (but not males) who score just above the admission threshold for more selective schools in Barbados attain more years of education than those that scored just below (essentially holding initial ability fixed). Here, in follow-up data, we show that these same females (but not males) are much less likely to have lost a job after the onset of COVID-19. We show that these effects are not driven by sectoral changes, or changes in labor supply. Because employers observe incumbent worker productivity, these patterns are inconsistent with pure education signaling, and they suggest that education enhances worker skill.

Suggested Citation

  • Beuermann, Diether & Bottan, Nicolas L. & Hoffmann, Bridget & Jackson, C. Kirabo & Vera-Cossio, Diego A., 2021. "Does Education Prevent Job Loss during Downturns?: Evidence from Exogenous Schools Assignments and COVID-19 in Barbados," IDB Publications (Working Papers) 11608, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:11608
    DOI: http://dx.doi.org/10.18235/0003624
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    Cited by:

    1. Hao, Zedong & Wang, Yun, 2022. "Education signaling, effort investments, and the market's expectations: Theory and experiment on China's higher education expansion," China Economic Review, Elsevier, vol. 75(C).
    2. Felipe Barrera-Osorio & Adriana D. Kugler & Mikko I. Silliman, 2021. "Job Training Through Turmoil," NBER Working Papers 29565, National Bureau of Economic Research, Inc.
    3. Arestis, Philip & Phelps, Peter, 2025. "Financial cooperatives and poverty mitigation during Brazil’s lost decade," World Development, Elsevier, vol. 191(C).
    4. Erik Katovich & Dominic Parker & Steven Poelhekke, 2026. "Timing Is Everything: Labor Market Winners and Losers During Boom-Bust Cycles," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 13(1), pages 229-260.

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    Keywords

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    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • I20 - Health, Education, and Welfare - - Education - - - General

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