Drop-out, stop-out or prolong? The effect of COVID-19 on students' choices

• DOI: https://doi.org/10.1108/IJM-06-2021-0353
• Published date: 14 December 2021
• Date: 14 December 2021
• Pages: 1700-1718
• Subject Matter: Economics,Labour economics
• Author: Dasa Farcnik,Polona Domadenik Muren,Valentina Franca

Drop-out, stop-out or prolong?

The effect of COVID-19 on

students’choices

Dasa Farcnik and Polona Domadenik Muren

School of Economics and Business, University of Ljubljana, Ljubljana, Slovenia, and

Valentina Franca

Faculty of Public Administration, University of Ljubljana, Ljubljana, Slovenia

Abstract

Purpose –The aim of the paper is to identify the causal effect of the COVID-19 induced crisis on students’

decisions about their educational plans. The authors hypothesise that students adjusted their decisions by

delaying graduation, dropping out or change the field of education because of increased uncertainty about

future employment and monetary returns.

Design/methodology/approach –The empirical approach is based on a survey done during the first wave

of COVID-19 in Slovenia. The probability of dropping out, prolonging or stop-out is designed by applying

probit and probit with insturmental variables empirical model.

Findings –Primary orientation towards work increases the probability of dropping out and financial

constraints increase the probability of prolonging studies. The same holds after accounting for endogeneity.

However, the authors do not find that poor job expectations due to COVID-19 affect students’decisions to

prolong,drop-out or stop-out. The authorsalso find that the primary orientationtoward work or study explains

thedifferences in the probabilityof each outcome that isnot influenced by enrolmentin a particular field of study.

Research limitations/implications –The results cannot be read as an objective predictionof the impact of

the COVID-19 crisis on college failures. However, the study provides insight into how students’expectations

change their intentions to prolong, drop-out, or stop-out during periods of high uncertainty. The extent, to

which measured intentions are realised, however, is uncertain.

Practical implications –Understanding the response diversity and motives behind students’study

decisions represents extremely valuable insights for economic policy. Mapped apprehensions, augmented by

heterogeneity in personal and financial characteristics, are relevant for policymakers. In terms of future

research, it would be interesting to analyse what changes occurred over a five-year period, specifically which

field of study was most affected by students’adjusted plans due to the pandemic.

Social implications –Students have always been a special group in the labour market. After the initial shock

of closing activities, studying online and the drastic decrease in student work due to COVID-19, the decision

was made in spring 2020 to continue on the chosen path or not. This paper provides insight into the changing

decision students made about their educational plans.

Originality/value –This paper is one of the first to highlight the implications of COVID-19 for the adaptation

of student plans in the transition from school-to work in Europe. It departs from the classical literature of

college failures, as specific macroeconomic conditions influence students to reconsider their educational

decisions. Moreover, the paper also contributesto the rapidly growing literature on the impact of the COVID-19

pandemic on household-level labour market outcomes, particularly with respect to job search and labour

supply decisions in general.

Keywords Students, COVID-19, Education, School-to-work transition

Paper type Research paper

1. Introduction

The recent health crisis has influenced many aspects of our lives. Based on anecdotal and

empirical evidence from the recent financial crisis a decade ago, one could expect the greatest

economic casualties of the recent global spread of corona virus will be young people. During

the unfavourable economic conditions, many students have adjusted their educational plans

IJM

43,7

1700

JEL Classification —J21, J22, J24

Funding: This research was supported by the Slovenian Research Agency [grant number P5-0128].

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0143-7720.htm

Received 14 June 2021

Revised 13 October 2021

Accepted 17 October 2021

International Journal of Manpower

Vol. 43 No. 7, 2022

pp. 1700-1718

© Emerald Publishing Limited

0143-7720

DOI 10.1108/IJM-06-2021-0353

and transitions from school to work to either drop-out of school and enter the labour market

because they or their families face financial hardship or to extend their studies and postpone

their entry to the labour market. The adverse economic conditions, lower expected income, or

perceived lower likelihood of finding a job in the future mean that some have chosen the

strategy of stopping out, i.e. they change their field of study (Saccaro and França, 2020). Still,

evidence of students’changing plans and actions during COVID-19 is quite scarce. Aucejo

et al. (2020) note, for example, that in the United States, a considerable share of students delay

their graduation (13%), withdraw from classes (11 %t) and intend to change majors (12%).

Raising the number and proportion of young adults who graduate from tertiary education

tops the policy agenda of most advanced economies. Despite stronger participation in tertiary

education, the number of graduates has grown very slowly due to dropouts and delayed

graduations, i.e. “failures”, averaging at around 30% in OECD countries (Aina et al., 2021). On

the macroeconomic level, prolonging tertiary education reduces the associated private

benefits of investment in tertiary education, the social returns for a publicly funded tertiary

education system and adds to the burden of the ageing populations in advanced economies.

Reducing dropout rates and increasing completion rates in higher education is a key strategy

for achieving the European Union’s Sustainable Development Goals (SDGs) in higher

education, viewed as critical for creating knowledge-intensive economies based on research

and innovation.

In this paper, we are interested in identifying the effect of the COVID-19-induced crisis on

students’decisions concerning their educational plans and transition from school to work.

We hypothesise that students have adjusted their decisions by delaying their graduation or

dropping out of school in response to growing uncertainty about future employment and

monetary returns. However, schooling decisions and the transition from school to work

depend on numerous factors (Aina et al., 2021;Pastore et al., 2021): student characteristics,

skills and behaviours; parental background and family networks; the tertiary education

system and institutional characteristics; and labour market performance. COVID-19 brought

an asymmetric shock to family funds and worsened labour market conditions, while global

uncertainty about future employment opportunities and the returns to a tertiary degree rose.

Moreover, due to the scarce labour market opportunities and the inability/unwillingness to

find a student job, the opportunity cost of schooling decreased and thus may have motivated

students to extend their education (Black et al., 2005). For example, Ahn et al. (2020) find the

lower opportunity cost of schooling has led more young people in the USA to complete high

school. Yet, the decline in disposable income (due to inability to work or family financial

distress) has forced students to finish or drop-out of school and enter the labour market earlier

than expected. Building on primary orientation theory (Warren, 2002), which is well known in

sociology, we can further explore whether students with varying primary inclinations to

either work or education have responded differently as they have re-evaluated the

opportunity cost of schooling during the pandemic.

Our main research questions are as follows: Does a primary orientation to work or study

affect the prolongation of study or dropping out during the pandemic? Do employment

shocks in certain educational sectors increase the likelihood of prolonging studies or even

changing one’s field of study? What role do financial conditions play in the likelihood of

dropping out?

To gain greater insight into students’decisions, we administered a questionnaire during

the COVID-19 epidemic’s first wave in Slovenia. We were particularly interested in three sets

of topics in the questionnaire: students’changed plans due to COVID-19, the extent of their

student work before and during the pandemic and what they were expecting by way of their

labour market outcomes.

Our paper is valuable for three principal reasons. It is one of the first to show COVID-19’s

impact on the adaptation of student plans in the transition from school to work in Europe.

The effect of

COVID-19 on

students’

choices

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