Business Cycles and Investment in Human Capital: International Evidence on Higher Education

Plutarchos Sakellaris and Antonio Spilimbergo

Electronic Working Papers from University of Maryland, Department of Economics

Abstract: We study the effect of economic fluctuations on investment in higher education for a wide range of countries. Our main focus is foreign students who come to the United States to attend university. There is a strong relation between enrollment and the business cycle in the sending country. The cyclical pattern of enrollment is sharply different for two groups of countries. For OECD countries enrollment is countercyclical, whereas for non-OECD countries it is procyclical. At business cycle frequencies, opportunity cost plays a dominant role in explaining enrollment from OECD countries, whereas ability to pay and credit constraints seem more prevalent at non-OECD countries. The results are confirmed using data on domestic enrollment from national sources.

Keywords: Business Cycles; Education; OECD; Credit Constraints; Opportunity Cost (search for similar items in EconPapers)
JEL-codes: E32 F2 O15 (search for similar items in EconPapers)
Date: 1999-09
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Citations: View citations in EconPapers (23)

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Journal Article: Business cycles and investment in human capital: international evidence on higher education (2000)
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