Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/227118 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
GLO Discussion Paper No. 733
Publisher: 
Global Labor Organization (GLO), Essen
Abstract: 
Human Capital Theory considers individuals' education as an investment in terms of money, time, effort, and the renouncement of income opportunities that they expect will be compensated during their working life. While these benefits are mainly in the long run, direct and indirect costs are conditioned by the present circumstances, and in particular, by the macroeconomic conditions. The literature investigating the influence of the business cycle on enrolment decisions often suggests a counter-cyclical relationship without considering that economic fluctuations can produce heterogeneous effects among households facing different economic situations. Through a fixed effects regression based on panel data from the Italian component of the EU-SILC survey, I find the existence of a counter-cyclical propensity to enrol that is symmetric to the stages of the economic cycle. However, after disaggregating the analysis by household income quartiles, results show that a 1% increase in GDP reduces the probability of the poorest individuals being enrolled in non-compulsory education by 1.2%, while the wealthier portion of the population shows an a-cyclical relationship. The policy implications of these results are particularly important as they suggest that measures directed towards youths from poorer households to promote their enrolment in non-compulsory education should be strengthened when economic conditions improve.
Subjects: 
Economic cycle
Educational economics
Human capital
Rate of return
JEL: 
A22
E32
I23
I24
Document Type: 
Working Paper

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