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Wages, Youth Employment, and School Enrollment: Recent Evidence from Increases in World Oil Prices

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  • René Morissette
  • Ping Ching Winnie Chan
  • Yuqian Lu

Abstract

We exploit variation in wage growth induced by increases in world oil prices to estimate the elasticity of young men’s labor market participation and school enrollment with respect to after-tax wages. Our main finding is that in the aggregate, increased wages have a dual impact: They tend to reduce—at least temporarily—young men’s full-time university enrollment rates but bring (back) into the labor market some young men who were neither enrolled in school nor employed. Contrary to previous research, we find little evidence that young men with no high school diploma now leave school in response to increased wages.

Suggested Citation

  • René Morissette & Ping Ching Winnie Chan & Yuqian Lu, 2015. "Wages, Youth Employment, and School Enrollment: Recent Evidence from Increases in World Oil Prices," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 222-253.
    • Handle: RePEc:uwp:jhriss:v:50:y:2015:i:1:p:222-253
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    Cited by:

    1. Michael J. Kottelenberg & Steven F. Lehrer, 2019. "How Skills and Parental Valuation of Education Influence Human Capital Acquisition and Early Labor Market Return to Human Capital in Canada," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 735-778.
    2. Mingzhi Xu, 2020. "Globalization, the skill premium, and income distribution: the role of selection into entrepreneurship," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(3), pages 633-668, August.
    3. Mikola, Derek & Webb, Matthew D., 2023. "Finish it and it is free: An evaluation of college graduation subsidies," Economics of Education Review, Elsevier, vol. 93(C).
    4. Jean-Denis Garon & Catherine Haeck & Simon Bourassa-Viau, 2020. "Going Back to School Takes Time: Evidence from a Negative Trade Shock," Working Papers 20-01, Research Group on Human Capital, University of Quebec in Montreal's School of Management.
    5. Aline Bütikofer & Antonio Dalla-Zuanna & Kjell G. Salvanes, 2023. "Natural Resources, Demand for Skills, and Schooling Choices," CESifo Working Paper Series 10543, CESifo.
    6. Mitra Akhtari & Natalie Bau & Jean-William Laliberté, 2024. "Affirmative Action and Precollege Human Capital," American Economic Journal: Applied Economics, American Economic Association, vol. 16(1), pages 1-32, January.
    7. Alessandrini, Diana, 2018. "Is post-secondary education a safe port and for whom? Evidence from Canadian data," Economics of Education Review, Elsevier, vol. 67(C), pages 1-13.
    8. Rajbhandari, Isha & Faggian, Alessandra & Partridge, Mark D., 2022. "Oil and gas boomtowns and occupations: What types of jobs are created?," Energy Economics, Elsevier, vol. 115(C).
    9. David A. Green & René Morissette & Ben M. Sand & Iain Snoddy, 2019. "Economy-Wide Spillovers from Booms: Long-Distance Commuting and the Spread of Wage Effects," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 643-687.
    10. Abu-Qarn, Aamer & Lichtman-Sadot, Shirlee, 2019. "Connecting Disadvantaged Communities to Work and Higher Education Opportunities: Evidence from Public Transportation Penetration to Arab Towns in Israel," IZA Discussion Papers 12824, Institute of Labor Economics (IZA).
    11. Dan A. Black, 2019. "Using natural resource shocks to study economic behavior," IZA World of Labor, Institute of Labor Economics (IZA), pages 470-470, December.
    12. Rodríguez-Puello, Gabriel & Chávez, Alicia & Pérez Trujillo, Manuel, 2022. "Youth unemployment during economic shocks: Evidence from the metal-mining prices super cycle in Chile," Resources Policy, Elsevier, vol. 79(C).
    13. Elizabeth U. Cascio & Ayushi Narayan, 2022. "Who Needs a Fracking Education? The Educational Response to Low-Skill-Biased Technological Change," ILR Review, Cornell University, ILR School, vol. 75(1), pages 56-89, January.
    14. Diana Alessandrini & Joniada Milla, 2024. "Minimum-Wage Effects on Human Capital Accumulation: Evidence from Canadian Data," Journal of Human Capital, University of Chicago Press, vol. 18(2), pages 346-376.
    15. Bourassa-Viau, Simon & Garon, Jean-Denis & Haeck, Catherine, 2022. "Educational choices and labour market outcomes in times of crisis," Economics of Education Review, Elsevier, vol. 88(C).
    16. Nyakundi M. Michieka & Richard S. Gearhart, 2022. "Oil price changes and wages: a nonlinear and asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(1), pages 1-71, February.
    17. Rickman, Dan S. & Wang, Hongbo & Winters, John V., 2017. "Is shale development drilling holes in the human capital pipeline?," Energy Economics, Elsevier, vol. 62(C), pages 283-290.
    18. Zuo, Na & Schieffer, Jack & Buck, Steven, 2019. "The effect of the oil and gas boom on schooling decisions in the U.S," Resource and Energy Economics, Elsevier, vol. 55(C), pages 1-23.
    19. Grant D. Jacobsen, 2019. "Who Wins In An Energy Boom? Evidence From Wage Rates And Housing," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 9-32, January.
    20. Bütikofer, Aline & Dalla-Zuanna, Antonio & Salvanes, Kjell G., 2018. "Breaking the Links: Natural Resource Booms and Intergenerational Mobility," Discussion Paper Series in Economics 19/2018, Norwegian School of Economics, Department of Economics.
    21. Aamer Abu‐Qarn & Shirlee Lichtman‐Sadot, 2022. "The Trade‐Off Between Work and Education: Evidence from Public Transportation Penetration to Arab Towns in Israel," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(1), pages 193-225, January.
    22. Anil Kumar, 2017. "Impact of oil booms and busts on human capital investment in the USA," Empirical Economics, Springer, vol. 52(3), pages 1089-1114, May.
    23. Andrew Foote & Michel Grosz, 2020. "The Effect of Local Labor Market Downturns on Postsecondary Enrollment and Program Choice," Education Finance and Policy, MIT Press, vol. 15(4), pages 593-622, Fall.

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