Characterizing the Schooling Cycle

Barbara Sadaba, Sunčica Vujić () and Sofia Maier
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Barbara Sadaba: Bank of Canada

No 15237, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper develops a novel and tractable empirical approach to estimate the cycle in schooling participation decisions, which we denominate the schooling cycle. The estimation procedure is based on unobserved components time series models that decompose higher education enrollment rates into a slow-moving stochastic trend and a stationary cyclical factor. By doing so, we obtain a full characterization of the cyclical dynamics of schooling participation and analyze its relationship with the business cycle in a time-varying fashion. Using data for 16–24-year-olds attending full-time post-secondary education in the United Kingdom from 1995Q1 to 2019Q4, we find evidence of a very persistent schooling cycle largely, but not exclusively, explained by the business cycle. Additionally, we find that the direction of the response of schooling participation to the business cycle, say, pro-, counter- or a-cyclical, is largely time-dependent, as is the degree of synchrony between both cycles. We note, however, that results are heterogeneous across gender.

Keywords: kalman smoother; state space; business cycle; human capital (search for similar items in EconPapers)
JEL-codes: C32 E3 I2 J2 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-04
New Economics Papers: this item is included in nep-lma and nep-mac
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Published - revised version published in: Economic Modelling , 2024, 132, 106649.

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Journal Article: Characterizing the schooling cycle (2024)
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