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Applications to higher education during periods of economic contraction

Author(s): Ryan Alberto Gibbons, Elina Kilpi-Jakonen

Thursday 15  |   11:40-12:00

Room: TP43

Session: Social stratification and inequality

Despite rising levels of educational attainment in the rich world, socio-economic differentials in educational outcomes persist. A core area of research interest is the role of secondary effects of social origin in the maintenance of such inequalities, namely the extent to which socio-economic inequalities reflect different choices made by students, net of prior performance (Boudon, 1974). A large body of research has observed that lower socio-economic position (SEP) students more readily make less ambitious educational choices than their higher-SEP peers (Jackson, 2013). Various explanations have been put forward to account for such SEP variation in educational decision-making processes, ranging from class-cultural determined ambitions to risk-aversion mechanisms. Most models evaluate decision-making processes in contexts of economic stability, keeping the ‘state of the world’ constant in the interest of both parsimony and generalisability. However, if educational decision-making is anticipated to reflect students and their households’ appraisal of risk and their efforts to minimise uncertainty, macroeconomic context could conceivably alter the premiums and costs associated with the educational choices available to students, thereby widening or narrowing socio-economic inequalities further. Studies of student decision-making in contexts of macroeconomic instability have reached contrasting findings. Macroeconomic uncertainty in the United States during the Great Recession was observed to be associated with a reduction in secondary effects, as the opportunity cost of prolonging education was reduced by the weak labour market (Pöyliö, 2020). Conversely, analysis of changing educational expectations of adolescents across 24 developed countries identified an association between economic downtimes and dampening of educational expectations, particularly among average-performing students, and a widening of educational inequalities of social origin (Salazar et al., 2020). Availing of the variation caused by the short but sharp economic contraction experienced by Finland during the Great Recession (2008-09), in this study we seek to contribute to this literature by utilising sibling fixed-effects models and Finnish register data to test whether students’ risk-aversion tendencies are heightened during periods of economic contraction. Preliminary results indicate that students matriculating during the Great Recession were less likely to apply to attend university than their siblings who matriculated in a period of economic stability. However, macroeconomic contraction does not appear to either increase or reduce inequalities of social origin in applications to attend university.