Staying-on at school at 16: the impact of labor market conditions in Spain

Despite the recent increase in educational investment, Spain still ranks towards the bottom of the OECD country list for the level of its human capital stock and the new inflow of high school graduates. We address this issue by investigating the impact of family characteristics and local labor market conditions on the demand for post-compulsory education. We find clear evidence of a positive effect of youth unemployment on the demand for education, alongside with a negative effect of adult unemployment. However, in quantitative terms, the record levels of youth unemployment, that should discourage an early labor market entry, did not enhance substantially the demand for post-compulsory education. Parents' education seems instead to be the main determinant of school enrollment, producing a sort of intergenerational persistence in the Spanish stock of human capital. (C) 2002 Elsevier Science Ltd. All rights reserved.