Economic Snapshot | Retirement

Education offers less protection from recessions

A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for March 27, 2002.

Education offers less protection from recessions
As the recession winds down, it is possible to assess its impact on different groups of workers. The chart below shows that the downturn actually led to proportionally greater increases in unemployment among persons with higher levels of education.

Effect of recession on the composition of unemployment, by education level (October 2000 - Feburary 2002)

The first bar (blue) shows that education group’s share of the increase in unemployment. For example, of the two million persons who became unemployed between October 2000 (the last low-point for the unemployment rate) and February 2002, 11% were high school dropouts and 26% were college graduates.

To put these shares in proper perspective-that is, to determine whether a group is over- or under-represented among the unemployed-the second bar (red) shows each group’s initial share of unemployment at the beginning of the recession. The fact that the second bar is higher than the first for both high school dropouts and high school graduates means that they are under-represented among those who became unemployed over the course of the downturn. The implosion of the tech bubble most likely contributed to this result, as highly educated workers in that sector were especially vulnerable to the weak economy that prevailed in 2001.

Unlike other post-war recessions, the 1990-91 downturn also had a disproportionate effect on white-collar workers, suggesting that one downside of the “new economy” is that higher education or occupational status provides less insulation from negative market forces.

This week’s Snapshot by EPI economist Jared Bernstein and research assistant Thacher Tiffany.

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