The Long-Run Effects of Recessions on Education and Income

This paper examines the long-run effects of 1980–1982 recession on education and income. Using confidential census data, I estimate difference-in-difference regressions that exploit variation across counties in severity cohorts age at time recession. For individuals 0–10 1979, a 10 percent decrease earnings per capita their county birth reduces four-year college degree attainment by 15 adulthood 5 percent. Simple calculations suggest aggregate, led to 1.3–2.8 million fewer graduates $66–$139 billion less earned income year. (JEL E32, I21, I26, J24, J31)