The silver lining in falling college enrollment

College enrollment "declined by close to half a million (463,000) between 2012 and 2013, marking the second year in a row that a drop of this magnitude has occurred," according to a report from the Census Bureau. And it's the largest two-year drop since Census began collecting enrollment data in 1966. Notably, the decline was concentrated in two-year colleges.

It is, of course, desirable to have a more educated population, particularly in an era of globalization and technological change that makes it harder for low-skilled workers to find good jobs. But the report also has a silver lining.

Education is countercyclical. That is, when healthy economic conditions, particularly employment opportunities, are scarce, both young and old workers seek more education to both improve their skills and provide a bridge to when job opportunities improve. However, during recessions other forces also work against increasing enrollment, such as declining family income and, in the most recent recession, rising tuition.

Even so, as the report notes, enrollment between 2006 and 2011 jumped to 3.2 million, a larger increase than over the preceding 10-year period ending 2006. Some of this rise can be attributed to population growth because enrollment generally expands from year to year as population grows.

A recent research paper from Harvard economist Bridget Terry Long documents that college enrollment also rose due to the Great Recession. Long found that "the net effect of the recession has been positive on college enrollment. While college enrollment increases generally each year, after the start of the Great Recession, there was an additional increase in attendance rates. The increase was concentrated among older, non-traditional students."

Thus, enrollment rises when the economy is doing poorly, but this reverses when the economy begins to improve. For example, Hispanic enrollment, which is concentrated in two-year colleges, grew by 1 million between 2007 and 2012, but it did not grow at all between 2012 and 2013 (despite the underlying increase in population).

Similarly, enrollment among blacks increased by 500,000 over the five-year period ending 2012 but was flat in recent years. Overall, enrollment for 18- to 24-year-old students has declined from 42 percent in 2011 to 40 percent in the fall of 2013.

The recovery is far from complete. Millions of people who would like to work still can't find acceptable employment. While declining enrollment means a less educated workforce, it's also a sign that the economy is doing better, especially for critical groups.