Higher education decisions and macroeconomic conditions at age eighteen

Using individual data from PIAAC and aggregate data on GDP and unemployment for the US, Europe, and Spain, we test how macroeconomic conditions experienced at age eighteen affect the following decisions in post-secondary and tertiary education: i) enrollment ii) dropping-out, iii) type of degree completed, iv) area of specialization, and v) time-to-degree. We also analyze how the effects differ by gender and parental background. Our findings are different for each of these geographies, which shows that the impacts of macroeconomic conditions on higher education decisions depend on context, such as labor markets and education systems. By analyzing various components of higher education together, we are able to obtain a clearer picture of how potential mechanisms linked to lower opportunity costs of education and reduced ability to pay during economic downturns interact to determine student selection.