More education, less volatility? The effect of education on earnings volatility over the life cycle

Judith M. Delaney, Paul J. Devereux

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Abstract

Much evidence suggests that having more education leads to higher earnings in the labor market. However, there is little evidence about whether having more education causes employees to experience lower earnings volatility or shelters them from the adverse effects of recessions. We use a large British administrative panel data set to study the impact of the 1972 increase in compulsory schooling on earnings volatility over the life cycle. Our estimates suggest that men exposed to the law change subsequently had lower earnings variability and less procyclical earnings. However, there is little evidence that education affects earnings volatility of older men.

Original languageEnglish
Pages (from-to)101-137
Number of pages37
JournalJournal of Labor Economics
Volume37
Issue number1
Early online date5 Oct 2018
DOIs
Publication statusPublished - 1 Jan 2019

Funding

Thanks to the UK data service for kindly allowing access to the data. Judith M. Delaney gratefully acknowledges financial support from the Economic and Social Research Council (ESRC), received while undertaking part of this research. We also thank seminar participants at University College London and the 2016 Irish Economic Association meeting in Galway. This paper forms a chapter of Delaney’s thesis, which was completed at University College London. Delaney wishes to thank her advisors, Sir Richard Blundell and Eric French, for helpful comments. Contact

ASJC Scopus subject areas

  • Industrial relations
  • Economics and Econometrics

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