Panel Paper: Further Education during Unemployment

Thursday, November 8, 2018
Marriott Balcony B - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Zhuan Pei and Pauline Leung, Cornell University

As the U.S. labor market increasingly rewards skilled work, those without a college degree have experienced disproportionately high unemployment, especially during the Great Recession. A commonly proposed measure to mitigate the costs of job loss is to promote new skill attainment through retraining, but the results on its effectiveness are mixed. In this paper, we provide new evidence on the returns to further education for unemployed workers by following the entire population of unemployment insurance (UI) claimants in the state of Ohio for at least four years post-displacement. We use high quality administrative data on earnings and enrollment in community colleges, four-year universities, and technical centers, covering the period before, during, and after the Great Recession. Applying a propensity score matching method, we compare the labor market outcomes of unemployed workers who pursued further education versus similar workers who did not. By graphically presenting the average earnings trajectories of the two groups, we show that there is little difference in earnings pre-enrollment, followed by temporarily depressed earnings among enrollees while they are in school, and sustained positive returns to schooling two years post-enrollment.