Upper Secondary School Completion and the Business Cycle

Abstract

Previous evidence suggests that enrollment in post-compulsory education increases (decreases) in cyclical downturns (upturns). However, little evidence exists on whether enrollment is successfully transformed into completed education. This paper adds to the literature by analyzing the relationship between completion of upper secondary education and regional unemployment using Norwegian regional panel data on students graduating from compulsory school between 1981 and 2004. We find robust evidence that completion rates are countercyclical. Our results suggest that poor labor-market conditions when starting upper secondary education have a lasting effect and motivate students to stay in school and graduate.

Local unemployment and the timing of post-secondary schooling

“…Evaluated at the variable means the elasticity of completion with respect to unskilled unemployment is 0.06, which is about 50 percent larger than the 0.04 found for completion of upper-secondary schooling by Reiling and Strøm (2015). Column (5) and (7) show results for completing at least vocational training and a college degree, respectively.…”

“…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.…”

“…To account for this I follow Reiling and Strøm (2015) and estimate long-run e ects, including unskilled unemployment rates for each of the interim years. The point 7 While the dependent and independent variables are de ned on the commuting zone level I estimate on an individual level to weight each commuting zone relative to its in uence in the main regression.…”

Youth unemployment and inactivity

“…Previous research on upper secondary schooling supports this prediction: Students are less likely to stay in school in good times. Also enrolment tends to decrease in good times (Clark, 2011), with graduation rates being countercyclical, as well (Reiling and Strøm, 2015). Additionally, the propensity to interrupt the education and drop out from school altogether increases in economic upturns .…”

Saving and Portfolio Allocation Before and After Job Loss

“…Raaum and Røed () and Reiling and Strøm () show that Norwegian adolescents shelter themselves from unemployment by undertaking more education during economic downturns. This contributes to the relatively low level of youth unemployment in Norway by OECD standards.…”