Out of work and into school: Labor market policies and college enrollment during the Great Recession ¬リニ

The Great Recession brought large increases in unemployment and college enrollment; we explore how changing labor market conditions affected the decision to enroll, focusing on the role of state-specific dimensions of Unemployment Insurance (UI) policy. We measure the enrollment response to changing economic conditions, comparing eighteen and nineteen yearolds with older individuals likely to have accumulated some labor market experience. We find that individuals in their mid to late-twenties are proportionally more responsive to cyclical variation in economic conditions, and we identify a substantial role of the UI program in determining post-secondary enrollment outcomes. States in which academic post-secondary programs unrelated to a specific occupation are allowable under UI have substantially magnified enrollment responses to local economic conditions. In addition, we provide some of the first evidence that the duration of UI affects a displaced individual’s propensity to enroll. These findings identify a substantial overlap between UI policy and post-secondary enrollment decisions, indicating the potential importance of UI in not only providing income but also facilitating investments in skills. JEL-Code: I230, J640, J650, I380, H530. Andrew Barr* Department of Economics University of Virginia USA Charlottesville, VA 22904-4182 [email protected] Sarah Turner Department of Economics University of Virginia USA – Charlottesville, VA 22904-4182 [email protected] *corresponding author September 9, 2013 Seminar participants at the CESifo Area Conference on the Economics of Education, Harvard Labor Seminar, and the University of Missouri have provided many helpful comments. We are grateful to Jesse Rothstein for helpful suggestions and for sharing his UI benefit duration materials and to Jeffrey Smith for his suggestions and comments on an earlier draft. We thank Nate Pattison for excellent research assistance.