On the Cyclicality of Schooling Decisions: Evidence from Canadian Data
This paper studies the cyclicality of schooling decisions. Its novelty is threefold. This is the first study that focuses on Canada. Second, the analysis is based on longitudinal data, while previous papers in the literature mainly focused on pooled cross-sectional data. Third, the analysis distinguishes among individuals of different ability levels, which is new to the literature. Main results show that macroeconomic conditions affect schooling decisions of recent high-school graduates only. University enrollment is counter-cyclical: more students enroll in university during economic contractions. Ability, proxied by parental education, negatively affects the counter-cyclicality of university enrollment. Finally, economic downturns stimulate the acquisition of theoretical rather than practical education. Contrary to university enrollment, college enrollment is pro-cyclical and enrollment in other (non-university) PSE institutions is acyclical.
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