During the Great Recession, many people who suddenly found themselves out of work went to school rather than looking for a new job or sitting at home.

Total college enrollment increased by three million from 2006 to 2011. That response makes sense, as workers are generally advised to develop new skills during times of mass unemployment in order to improve their job prospects. 

But less clear is how economic downturns affect long-term educational attainment. 

In a paper in the American Economic Journal: Applied Economics, author Bryan Stuart investigates how the double-dip recession of 1980–1982 affected the long-run educational and career achievements for young people during that period. 

 

Figure 3 from Stuart (2022)

Figure 3 from his paper shows how the recession during the early 1980s affected children’s four-year college degree attainment. The age of each cohort in 1979 is plotted along the x-axis and the effect is along the y-axis. The biggest effects were felt by younger children. For individuals less than 10 years old, a 10 percent decrease in earnings per capita from 1979 to 1982 in their county of birth reduced four-year college degree attainment by 15 percent. A comparison group of people 23–28 years old were barely affected at all, which is not surprising because most people have finished college by age 23.

Stuart goes on to find that, for kids 10 years and younger, the recession decreased earned income as adults by 5 percent and increased the probability that they would be living in poverty by 13 percent. The findings highlight the long-run impact of recessions, which may stem from parents’ reduced ability to invest in their children’s education.

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"The Long-Run Effects of Recessions on Education and Income" appears in the January 2022 issue of the American Economic Journal: Applied Economics.