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Unemployment vs. school enrollment

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April 24, 2009 – Comments (0)

Just finished a paper on cyclicality of university/college with regards to the business cycle.  Used a 10 year data set with ~12,000 people aged 16-25.  Turns out that in Canada, just like the united states, when unemployment rises by 1% school enrollment increasess by 0.8%

There are two factors at play, lower opportunity costs and higher credit/liquidity constraints.  The opportunity costs tend to dominate the decision making process but I wonder if the current recession will follow that same path with regards to school enrollment.  I tend to think liquidity/credit constraints will have a larger impact this time around relative to opportunity costs.

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