Local economic booms that lead to higher wages can affect the trade-off high school students face between working today and investing in skills and education that can increase future earnings.
In a recent article published in the American Economic Journal: Applied Economics, Associate Dr. Alina Kovalenko uses administrative panel data from Texas public schools to analyze how shocks to local economic conditions affect education and employment decisions. Dr. Kovalenko finds that high school students at the bottom of the academic ability distribution worked and earned more in response to the fracking boom, and that these earnings gains persisted through ages 24–25 even though the same students also became less likely to attend classes and graduate from high school. These results suggest that the opportunity cost of education is significant for these students.
The full article, “Natural Resource Booms, Human Capital, and Earnings: Evidence from Linked Education and Employment Records,” can be found below.
Copyright American Economic Association; reproduced with permission of the American Economic Journal: Applied Economics.