On the cyclicality of schooling: theory and evidence

Economic theory indicates that opportunity- cost considerations tend to make schooling countercyclical whereas ability-to-pay considerations have the opposite effect. We examine the college enrollment decisions of individuals in the US using the Current Population Survey and find that their propensity to enroll is countercyclical. There seems to be significant substitution during the business cycle between human capital investment and competing economic activities. Copyright 2003, Oxford University Press.