Characterizing the schooling cycle

Published: 9 January 2024| Version 1 | DOI: 10.17632/c56yv59sdb.1
Barbara Sadaba,


Files to replicate results of paper "Characterizing the schooling cycle" by Sadaba, B., Vujic, S., and Maier, S. (2024) Economic Modelling. This paper examines the cyclical dynamics of school participation decision, using data for 16- 24-year-olds attending full-time post-compulsory education in the UK in the period from 1995Q1 to 2019Q4. We nd evidence of a highly persistent education cycle, largely explained by the business cycle. Importantly, the response of school participation to the business cycle is time-dependent-- counter-cyclical in the period around the Great Financial Crisis and pro-cyclical in other years. We propose two channels as predictors of the cyclicality of schooling participation--the ability-to-pay for further education and the opportunity-cost of spending time in education rather than at work. We also show that the results are heterogeneous by gender, with female choices being more responsive to changes in aggregate macroeconomic conditions than male choices. Timely policy interventions using regular education as a counter-cyclical tool can help prevent persistent or permanent unemployment in the aftermath of a crisis.


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Bank of Canada


Education Economics, Kalman Filtering, Human Capital, State Space Model