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Academic Drop-out and the Great Recession
In this paper we use individual-level data on three different cohorts of university students in Italy to study how the Great Recession affected their drop-out probability. The effect of the Recession on students’ choices is theoretically ambiguous. On the one hand, the deterioration of the financial condition of their families may induce them to drop-out more. On the other hand, the lower opportunity cost of tertiary education may translate into stronger incentives for them to continue studying. We examine these two channels using the changes in the adult and the youth unemployment rates and exploiting their variation across regions, genders, and educational levels in order to achieve identification. We find evidence that, net of any potential effect on enrolment, the drop-out probability decreased as a result of the Recession. However, the opposite is true for students from disadvantaged families. The results also vary considerably across genders. For males only the opportunity cost channel is at work, while for females the financial situation of their families also plays a role. This is partly due to differences in the field of study, with a high concentration of females in humanities.
Efi Adamopoulou is an economist at the Bank of Italy. She received her Ph.D. in Economics from Universidad Carlos III de Madrid in 2013. Efi’s research focuses on labour economics and applied micro-econometrics. She is particularly interested in research on household decision-making, education, consumption, and family economics. In 2012 she was awarded the EALE Young Labour Economist prize. For more information please visit her website.
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