The Cyclicality of Skill Acquisition: Evidence from Panel Data

Abstract

This paper presents new empirical evidence regarding the cyclicality of skill acquisition activities. The paper studies both training and schooling episodes at the individual level using quarterly data from the NLSY79 for a period of 19 years. We find that aggregate schooling is strongly countercyclical, while aggregate training is acyclical. Several training categories, however, behave procyclically. The results also indicate that firm-financed training is procyclical, while training financed through other means is countercyclical; and that the cyclicality of skill acquisition investments depends significantly on the educational level and the employment status of the individual. (JEL E24, E32, I20, J24)

Countercyclical school attainment and intergenerational mobility

“…Our paper is also closely related to existing contributions analysing the effects of the business cycle on education (Betts and McFarland, 1995;Dellas and Sakellaris, 2003;Black et al, 2005;Méndez and Sepúlveda, 2012;Gaini et al, 2013;Charles et al, 2015;Aparicio-Fenoll, 2016;Atkin, 2016;Maier and Vujić, 2017). The main contribution of our paper is that it focuses on differences by parental occupation and on long-run outcomes in the labor market, while these analyzes are generally restricted to enrollment or more rarely educational attainment.…”

Economic freedom and human capital investment

“…5 Furthermore, we control for GDP growth because results for the US suggest that schooling is countercyclical (e.g., Méndez and Sepúlveda, 2012).…”

The Impact of Macroeconomic Conditions in Childhood on Adult Labor Market Outcomes

“…31 The effect of business cycles on skill acquisition is an active area of research. For example, Dellas and Sakellaris (2003) analyze the mechanisms through which macroeconomic fluctuations influence educational attainment, and Méndez and Sepúlveda (2012) characterize the cyclicality of different forms of human capital investment. The results in the current paper are consistent with previous empirical work.…”