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

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 authors also find that the primary orientation toward work or study explains the differences in the probability of each outcome that is not influenced by enrolment in a particular field of study. Research limitations/implications The results cannot be read as an objective prediction of 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 contributes to 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.