School as a Shelter ? School Leaving-Age and the Business Cycle in France

This paper examines the impact of the business cycle on school-leaving decisions in France for the period 1983-2009. Business cycle effects are twofold. On the one hand, bad economic conditions reduce the opportunity cost of schooling and may induce higher school participation. On the other hand, it could entail a loss of income for families which may bear no more the cost of their children's education. Using the French Labor Force Surveys, we estimate the effects of current and past unemployment rates on school leaving decisions. We find that some students postpone their entry into the labor market during an economic crisis. These effects are statistically significant but weak. Our results suggest that most students have an education target level or that only few of them are able to anticipate or postpone their entry to mitigate the effects of the business cycle.