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More education has always reduced the probability of unemployment, and it has become an increasingly important criterion for success in the job market during the past 20 years, as shown in the accompanying chart. Although the supply of both high school and college graduates has grown sharply, there has been a relative increase in the demand for college graduates. The trends in unemployment rates for college graduates and high school graduates point up the ways education is valued by employers and changes in the economy over the past 20 years.

From an occupational perspective, the lower unemployment rate for college graduates versus high school graduates reflects the growth of occupations that require college-educated workers. Between 1972 and 1987, occupations with comparatively high proportions of workers with 4 or more years of college grew, -while those with low ratios of college graduates generally declined.

Business cycle fluctuations also strongly influence the rate of unemployment for the various educational groups. During recessions between January 1967 and December 1986 (the shaded areas on the chart), the unemployment rate for high school graduates increased much more than did the rate for college graduates.

One reason the unemployment rate for college graduates rose less during recessions is that they tend to work in industries that are less susceptible to swings in the business cycle. For example, in March 1987, 42 percent of all college graduates were employed in professional services, an industry that has been relatively unaffected by changes in the business cycle. In contrast, only 15 percent of all high school graduates were employed in that industry. However, 30 percent of all high school graduates were employed in the goodsproducing sector of the economy, which is most susceptible to the business cycle; only 18 percent of all college graduates were employed in that sector.

It is likely that the competitive advantage held by college graduates will continue in the future.
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Title Annotation:education and unemployment
Publication:Occupational Outlook Quarterly
Date:Sep 22, 1988
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