The Cyclicality of University Enrolments in ItalyISER Internal Seminars

The aim of the present paper is to assess whether Italian enrolments in tertiary education show a cyclical pattern, and, if they do, what are the main determinants of the result found. Human capital theories predict that in absence of borrowing constraints non compulsory schooling decisions are countercyclical. However, if households are credit constrained enrolments are predicted to behave procyclically. The empirical evidence on this issue is contradictory. This paper aims at contributing to the literature, using Italian data. Analysis of aggregate time series shows that first year enrolments in tertiary education behave procyclically. Thus result is puzzling and apparently contradicts the theoretical predictions. Econometric analysis on longitudinal data from the Bank of Italy (SHIW) solves the puzzle. Regression models show that the individual behaviour is consistent with the aggregate one when the proposed specifications do not contain household income. However, when this regressor is introduced, first year university students implement a procyclical behaviour. The result is robust to different econometric techniques. Italian university students have very limited or no access to credit to finance their education. Henceforth, they rely on intra-household transfers to pay their university expenses. As this way of funding mainly depends on a strongly procyclical variable, the aggregate behaviour seems to contradict the theoretical predictions. However, when controlling for household income, individuals’ tertiary educational behaviour becomes consistent with the theory.

Presented by:

Stefano Alderighi (University of Essex, Dep. of Economics)

Date & time:

January 28, 2015 1:00 pm - January 28, 2015 2:00 pm

Venue:

Large Seminar Room (2N2.4.16)


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