The Effect of Local Labor Market Downturns on Postsecondary Enrollment and Program Choice

Abstract

We examine how workers invest in human capital following unanticipated local labor market downturns. We find that, on average, two-year college enrollment increases by three students within three years for every one hundred workers laid off. This rise in enrollment accounts for half the observed increase in labor force nonparticipation following mass layoffs. Completions in career-technical programs also increase, especially in short-term certificates, but vary by field of study. We find the effect on completions is strongest in fields of study with larger earnings returns.