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Speaker: Karl Schulze, Princeton University

Karl Schulze, is a PHD student in Economics at Princeton University.

Title: Re-skilling, Up-skilling, and the Role of Education in the Adjustment to Economic Shocks

Abstract: Workers often experience adverse shocks after their initial career and schooling choices are made. One way workers may adapt to these shocks is by returning to school later in life to renew these human capital investments, which may involve substantial opportunity costs in terms of foregone earnings and accumulated skills that may not transfer to new types of work. To study this trade-off, I utilize administrative data on earnings and enrollment histories for adult workers from Texas and focus on one particular shock that was accompanied by substantial increases in community college enrollment, the Great Recession. I use the data to document stylized facts about pathways taken between work and education. Using an exposure design based on a worker’s pre-Recession industry, I study who enrolls in response to granular, industry-specific shocks. I measure enrollment increases that are driven by workers studying health-related degrees and for those coming from professional industries (e.g. finance/real estate). Motivated by these facts, I develop and estimate a dynamic discrete choice model to predict counterfactual worker choices and relate these choices to earnings outcomes. I contribute by quantifying the importance of transferable skills in a data-driven approach, which generates comparative advantage over types of training based on a worker’s previous work and schooling history. Estimates from the model are pessimistic on earnings gains from returning to school for those at the margin of enrollment but indicate substantial heterogeneity in benefits.