Does Education Prevent Job Loss During Downturns? Evidence from Exogenous School Assignments and COVID-19 in Barbados
Canonical human capital theories posit that education, by enhancing worker skills, reduces the likelihood that a worker will be laid-off during times of economic change. Yet, this has not been demonstrated causally. We link administrative education records from 1987 through 2002 to nationally representative surveys conducted before and after COVID-19 onset in Barbados to explore the causal impact of improved education on job loss during this period. Using a regression discontinuity (RD) design, Beuermann and Jackson (2020) show that females (but not males) who score just above the admission threshold for more selective schools in Barbados attain more years of education than those that scored just below (essentially holding initial ability fixed). Here, in follow-up data, we show that these same females (but not males) are much less likely to have lost a job after the onset of COVID-19. We show that these effects are not driven by sectoral changes, or changes in labor supply. Because employers observe incumbent worker productivity, these patterns are inconsistent with pure education signalling, and suggest that education enhances worker skill.
This project was funded by the Inter-American Development Bank. We are indebted to Junior Burgess and Dionne Gill from the Barbados Ministry of Education for allowing us to access their data, their assistance, and their generosity. We would like to thank Aubrey Browne from the Barbados Statistical Service for allowing us to introduce the necessary questions in the 2016 Survey of Living Conditions to match it with the administrative records. We deeply acknowledge Juan Muñoz, Ramiro Flores Cruz, Andreas Kutka and Agustin Raviolo from Sistemas Integrales Ltd. for high-quality data collection work in the 2016 Survey of Living Conditions and the 2020 COVID-19 Telephone Survey. Andrea Ramos Bonilla provided excellent research assistance. The statements and views expressed are solely the responsibility of the authors. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.