A number of authors have investigated whether aggregate and! or local labor market conditions affect college enrollment, hut the results across studies are very inconsistent. There are two shortcomings in the previous studies that may explain the weak correlation between labor market opportunities and college enrollment. First, we will use the unique structure of the HS & B to construct unemployment and wage rates for new high school graduates at the SMSA level. Second, we will estimate both two and four- year college enrollment equations, allowing for a differential impact of labor market opportunities on these two types of schools. While four- year college enrollments tend to be higher during recessions, two- year college attendance decreases. Two- year college enrollments are more sensitive to labor market conditions than enrollments in four- year colleges. The results in our study do not support the findings reported in previous studies in which the authors have used aggregate level data for unemployment rate and average wage. The effect of local labor markets on college enrollment.