Wednesday, March 19, 2008

Universities and the Business Cycle

There's recently been some discussion on various forums I frequent about the desirability of going back to school now, in anticipation of missing out on years of substandard earnings, and then coming back to the job market with new skills as soon as the economy gets going again.

This intuitively makes sense. Economic stagnation means lower or below-trend wages, the forgoing of which is the main cost of education.

Does this mean that universities are pro-cyclical institutions? Investing in education certainly decreases output, just as spending money to build a new factory depresses output now (relative to paying workers overtime, say) for increased output in the future.

Well, to a degree, but I doubt that anticipation about economic growth is the main driver in enrollment. Still, it's an interesting thought. Probably particularly prevalent in economics, where a lot of people who could consider graduate studies have very bonus-driven wages.

POSTSCRIPT: In at Queen's. $12k after tuition and applicable fees. That's all my decisions. 3/3 at MA level, 2/6 at the PhD level. Decision time!

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