The Unequal Opportunity For Skills Acquisition During The Great Recession In Europe

• Published date: 01 June 2021
• Author: Sara Ayllón,Natalia Nollenberger
• Date: 01 June 2021
• DOI: http://doi.org/10.1111/roiw.12472

© 2020 International Association for Research in Income and Wealth

289

THE UNEQUAL OPPORTUNITY FOR SKILLS ACQUISITION DURING

THE GREAT RECESSION IN EUROPE

by Sara ayllón*

Department of Economics & EQUALITAS,University of Girona

AND

natalia nollenberger

IE Business School,IE University

This paper is the first to investigate the extent to which the high levels of joblessness resulting from

the Great Recession across Europe have translated into higher school attendance among youth. Using

repeated cross-sectional and longitudinal data from the EU-SILC for 28 countries, we establish a robust

counter-cyclical relationship between rising unemployment rates and school enrolment. The same is

true of transitions back to education. Our analysis by subgroups reveals a worrying trend, with youths

from the most disadvantaged backgrounds (measured by low household income) less likely to enrol in

tertiary studies when unemployment rises.

JEL Codes: I23, I24, J64, E32

Keywords: EU-SILC, Great Recession, school enrolment, unemployment, unequal opportunity, youth

1. introduction

The Great Recession has hit young people particularly hard across Europe

(Bell and Blanchflower, 2011). According to the microdata from the Labour Force

Survey, the unemployment rate for those between 15 and 29 years of age reached

18.8percent in the European Union (28 countries) in 2013, while the corresponding

figure for those between 30 and 64 was 9.4percent. In countries such as Spain or

Greece, nearly every second young person who was looking for a job that year could

not find one, resulting in a youth unemployment rate in those countries of 43.2per-

cent and 48.7 percent, respectively. Undoubtedly, such levels of joblessness and

Notes: This paper has received funding from the EU’s Horizon 2020 Research and Innovation

Programme under grant agreement no. 649395 (project title: Negotiate). Ayllón also acknowledges sup-

port from the projects ECO2016-76506-C4-4-R and 2017-SGR-1571. Participants at the Lisbon

Research Workshop on Economics, Statistics and Econometrics of Education (2017), at the PAA in

Chicago (2017), at the CESC in Barcelona (2017), at the Nordic Demographic Symposium in Turku

(2017), at the ESPE in Glasgow (2017), at the ECINEQ in New York (2017) and at the Workshop of

Economics of Education in Barcelona (2018) are thanked for their useful comments. Sara Ayllón

thanks the Department of Social Sciences at the University of Eastern Finland (Joensuu) for their

warm hospitality while writing most of this paper. Any errors or misinterpretations are our own.

*Correspondence to: Sara Ayllón, C/Universtat de Girona 10. 17003, Girona, Spain (sara.ayllon@

udg.edu).

Review of Income and Wealth

Series 67, Number 2, June 2021

DOI: 10.1111/roiw.12472

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Review of Income and Wealth, Series 67, Number 2, June 2021

290

© 2020 International Association for Research in Income and Wealth

overall employment insecurity have important consequences for young people’s lives

in multiple domains: the chances of leaving home (Becker etal., 2010; Matsudaira,

2016), decisions on marriage (De la Rica, 2005), fertility and family formation

(Del Bono etal., 2012, 2015; Ayllón, 2019), income mobility (Cantó and Ruiz, 2015)

and so on.

A poor economy can also affect young people’s decisions on investment in

education. It is reasonable to expect that when young people observe that there are

fewer jobs available (and perhaps more precarious working conditions), pursuing

further education can be regarded as a good alternative to joblessness or bad career

prospects. The opportunity cost of education is lower when the unemployment rate

is high, and so remaining in education or returning to school could be more likely

during an economic downturn than in a growing economy (Becker, 1975; Heylen

and Pozzi, 2007). Uncertainty about the future can also drive school retention and

transitions back to education (Kodde, 1986; Canton, 2002).

On the other hand, it is also true that when the economy enters recession and

governments are forced to implement austerity measures, educational budgets can

suffer major cuts, jeopardizing young people’s chances of remaining in or return-

ing to education—because of increased tuition fees, a reduced number of scholar-

ships or more expensive student loans (Kane, 1994; Dellas and Sakellaris, 2003).1

By the same token, in those contexts where non-compulsory education is not fully

subsidized, a decline in individual and family income during recession years may

also prevent young people from remaining in, or returning to, education because of

an increased ‘inability to pay’ (Christian, 2007; Méndez and Sepúlveda, 2012;

Sakellaris and Spilimbergo, 2000). A lower availability of part-time jobs to fit in

with study may also make enrolment more difficult during recession (Dellas and

Sakellaris, 2003).

The main objective of this paper is to assess the extent to which the high levels

of joblessness resulting from the Great Recession across Europe have translated

into a higher probability among young people of educational enrolment, of get-

ting back into education or of remaining at school. Does the reduced opportunity

cost of study override the increased difficulties in educational enrolment brought

about by austerity measures and declining income? If so, our results should find

a positive association between increasing unemployment rates and the probability

that young people are enrolled. But if the (in)ability-to-pay effect is dominant, then

there will be a negative association between unemployment and school enrolment.

Empirical evidence on the effect of crises on schooling decisions is scant (par-

ticularly in the case of Europe) and ambiguous (mostly based on single-country

case studies). The majority of papers find a counter-cyclical relationship: when the

economy enters a period of recession (and the unemployment rate rises), school

attendance and enrolment increase (see, among others, Alessandrini etal., 2015;

Long, 2015; Méndez and Sepúlveda, 2012; Heylen and Pozzi, 2007; Dellas and

1Multiple examples of cutbacks in education are found across Europe in the context of the Great

Recession. According to the European University Association, public spending on higher education

decreased more than 40% in Greece between 2008 and 2014; between 20% and 40% in Ireland, Lithuania

and the United Kingdom; and between 10% and 20% in the Czech Republic, Spain, Iceland and Italy

(see Public Funding Observatory, 2016). As for tuition fees, possibly, the most extreme case during the

period can be found in the United Kingdom, where fees tripled in 2012.