Are College Towns Really Recession Proof?

Labor markets in college towns have been viewed as more resilient to national recessions. This study examines that presumption, using monthly data on county unemployment and employment rates from 1990 through 2019. We find that counties housing college students have lower unemployment rates in response to increases in national unemployment rates than their neighboring non‐college counties, consistent with the view that college towns are less exposed to national business cycles. However, college county employment rates also fall more rapidly during national economic downturns, casting doubt on college town labor market resilience. The puzzling result appears to be related to the use of new claims for unemployment benefits in measuring county unemployment rates. Low unemployment rates in college counties are related to a lower probability that unemployed college students would qualify for unemployment benefits due to insufficient job tenure and earnings.