Leveling the Peaks and Troughs in the Demographic Cycle: An Application to School Enrollment Rates

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Abstract
To maximize lifetime discounted earnings, individuals act so as to fill in the peaks and troughs of the demographic cycles exhibited by population and hence relative income. As a consequence, those born prior to the peak increase their school enrollment rates, while those trailing the peak decrease their school enrollment rates. Education thus provides a differential tracking mechanism. While individuals cannot choose the cohorts in which they are born, they are able to time their entry into the career labor market through education. This asymmetric demographic effect is tested in a time series equation. Our model helps to explain the "surprisingly" steep decline in school enrollment rates during the 1970s.

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