Do Recessions Keep Students in School? The Impact of Youth Unemployment on Enrolment in Post-compulsory Education in England

Abstract

In this paper I assess the impact of the youth labour market on enrolment in post-compulsory education. To that end, I construct data for a panel of English regions and identify youth labour market effects using variation in youth unemployment rates across regions and over time. My estimates suggest that the youth labour market has large enrolment impacts, at least twice as large as suggested by UK estimates based on time series data. This helps to explain why enrolment growth slowed down from the mid-1990s and suggests that a weakening youth labour market could cause enrolment to increase again.

A new look at the discouragement and the added worker hypotheses: applying a trend–cycle decomposition to unemployment

“…Assuming an inverse relationship between labor participation and enrollment in education, a negative influence of unemployment on participation could be expected for the younger (Clark 2011). However, the German institutional setting explains our finding: the majority of school leavers take up a vocational training, which statistically counts to the labor force.…”

Local unemployment and the timing of post-secondary schooling

“…A one percentage point increase in local unskilled youth unemployment increases the probability of continued schooling by 0.50 percentage points. Evaluated at the sample means the point estimate in column (4) of Table 3 implies an elasticity of 0.25, which is slightly larger than the 0.18 found for post-compulsory schooling in the United Kingdom (Clark, 2011). …”

“…A rich literature exists on the link between school enrollment and both national labor market conditions (Pissarides, 1981;Fredriksson, 1997;McVicar and Rice, 2001;Dellas and Sakellaris, 2003;Ewing et al, 2010) and sub-national labor market conditions (Rivkin, 1995;Rice, 1999;Albert, 2000;Card and Lemieux, 2000;Petrongolo and San Segundo, 2002;Dellas and Sakellaris, 2003;Giannelli and Monfardini, 2003;Bedard and Herman, 2008;Flannery and O'Donoghue, 2009;Clark, 2011;Barr and Turner, 2013;Reiling and Strøm, 2015). Table 1 summarizes the main contributions.…”

Effects of entering adulthood during a recession

“…One study that looks at cross-region changes in unemployment rates and post-secondary enrollment in the UK finds large effects of unemployment rates on enrollment, which indicate that the elasticity of enrollment with respect to youth unemployment is approximately 0.2 [4].…”