A great depression? Students' educational aspirations and investments in the aftermath of the Great Recession

Eleonora Porreca (), Lucia Rizzica () and Marco Tonello ()
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Eleonora Porreca: Bank of Italy
Lucia Rizzica: Bank of Italy
Marco Tonello: Bank of Italy

No 1528, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We study how economic downturns shape human capital accumulation by affecting the educational aspirations of adolescents and their subsequent academic efforts and choices. Using student census data matched with administrative records, we construct an individual-level measure of exposure to local labor market conditions based on the share of school peers whose parents are unemployed. Identification relies on quasi-random variation in exposure across adjacent cohorts within the same school. We find that greater exposure to adverse business cycle conditions significantly reduces students' aspirations to pursue tertiary education and negatively affects subsequent outcomes, including high school GPA, college enrollment and dropout rates.

Keywords: aspirations; higher education; business cycle; peer effects (search for similar items in EconPapers)
JEL-codes: E32 I21 I23 J24 (search for similar items in EconPapers)
Date: 2026-04
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1528_26

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