The Long-Run Effects of Recessions on Education and Income
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Bryan A. Stuart
- American Economic Journal: Applied Economics (Forthcoming)
Abstract
This paper examines the long-run effects of the 1980–1982 recession on education and income.
Using confidential Census data, I estimate difference-in-differences regressions that
exploit variation across counties in recession severity and across cohorts in age at the time of
the recession. For individuals age 0–10 in 1979, a 10 percent decrease in earnings per capita in
their county of birth reduces four-year college degree attainment by 15 percent and earnings in
adulthood by 5 percent. Simple calculations suggest that, in aggregate, the 1980–1982 recession
led to 1.3–2.8 million fewer college graduates and $66–$139 billion less earned income
per year.
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