Dive Brief:
- The National Bureau of Economic Research has concluded that there was a correlation between the last housing boom and college attendance, according to a study written by Kerwin Kofi Charles and Erik Hurst, of the University of Chicago, and Matthew J. Notowidigdo, of Northwestern University.
- During the last U.S. real estate market explosion — from the late 1990s to 2006 — college enrollment in the U.S. declined approximately 30% among adults aged 18 to 25.
- During times of economic highs, The Atlantic reported, the "opportunity cost" of higher education increases so that young adults believe their higher payoff will come through getting a job rather than going to college.
Dive Insight:
This report confirms what many already say: If you can get a job with a good salary, without going to school, why spend the time and the money when you can earn big without it? Conversely, if you can’t find a job, head to school to learn a skill that will help you get one.
During real estate booms, when home equity skyrockets — which encourages homeowners to spend — many of the people who would otherwise be in school jump directly into the workforce to fill the inevitable demand for service workers in industries like construction, retail, and hospitality, according to the report.
Those seeking a two-year degree were most affected by the housing market-economy correlation, the report said, because, for many, a two-year degree provides only a marginal improvement in salary, perhaps even negligible, during a boom time. Enrollment in two-year programs did increase, however, when the market collapsed.
The NBER study also found that a large number of those who did forego college during the housing boom did not return, whether by choice or by circumstance, and there was much less of a relationship between four-year-degree seekers and the health of the real estate market.