University of life: A housing boom puts young people off studying

HOUSING bubbles have a lot to answer for. The bursting of the US ‘subprime’ bubble in 2007-2008 triggered financial panic. Soaring house prices have been blamed for widening inequality. A new paper, from researchers at Chicago and Northwestern universities, adds another item to the charge sheet: a housing boom might stop your kids going to university.At first glance, this seems surprising. For homeowning families, rising house prices should enable them to borrow more against the value of their house, helping to pay fees for university-going offspring. But tuition is not the only cost of further study. Those extra years in the library (or the bar) is time that could have been spent in a job. When they can get a decent wage without going to university, some young people will choose work over lectures.The authors argue that this is exactly the choice that many young Americans made in the early noughties. A housing boom pushed up wages in related industries, like construction and real estate. Wages may also have increased in low-skilled retail and service jobs, as upbeat homeowners spent their newfound wealth. At the same time, the growth in university attendance slowed. By 2006, the proportion of young people who had spent some time in higher education was four percentage points below where it would have been had earlier trends continued.How much of this slowdown can be …
Source: The Economy