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The Short- and Long-Term Career Effects of Graduating in a Recession

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  • Philip Oreopoulos
  • Till von Wachter
  • Andrew Heisz

Abstract

This paper analyzes the magnitude and sources of long-term earnings declines associated with graduating from college during a recession. Using a large longitudinal university-employer-employee dataset, we find that the cost of recessions for new graduates is substantial and unequal. Unlucky graduates suffer persistent earnings declines lasting ten years. They start to work for lower paying employers, and then partly recover through a gradual process of mobility toward better firms. We document that more advantaged graduates suffer less from graduating in recessions because they switch to better firms quickly, while earnings of less advantaged graduates can be permanently affected by cyclical downgrading. (JEL E32, I23, J22, J23, J31)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 4 (2012)
Issue (Month): 1 (January)
Pages: 1-29

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Handle: RePEc:aea:aejapp:v:4:y:2012:i:1:p:1-29

Note: DOI: 10.1257/app.4.1.1
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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Le diplôme rapporte… surtout lors des récessions
    by ? in D'un champ l'autre on 2014-05-27 18:39:00
  2. Au mauvais endroit au mauvais moment? Le devenir des primo-entrants sur un marché du travail en crise
    by arthur.heim@education.gouv.fr (Arthur Heim) in BS Initiative on 2014-06-17 08:09:18
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