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The Lost Generation? Labor Market Outcomes for Post-Great Recession Entrants

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  • Jesse Rothstein

Abstract

I study cohort patterns in the labor market outcomes of recent college graduates, examining changes surrounding the Great Recession. Recession entrants have lower wages and employment than those of earlier cohorts; more recent cohorts’ employment is even lower, but the newest entrants’ wages have risen. I relate these changes to “scarring” effects of initial conditions. I demonstrate that adverse early conditions permanently reduce new entrants’ employment probabilities. I also replicate earlier results of medium-term scarring effects on wages that fade out by the early 30s. But scarring cannot account for the employment collapse for recent cohorts. There was a dramatic negative structural break in college graduates’ employment rates, beginning around the 2005 entry cohort, that shows no sign of abating.

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  • Jesse Rothstein, 2023. "The Lost Generation? Labor Market Outcomes for Post-Great Recession Entrants," Journal of Human Resources, University of Wisconsin Press, vol. 58(5), pages 1452-1479.
    • Handle: RePEc:uwp:jhriss:v:58:y:2023:i:5:p:1452-1479
    Note: DOI: https://doi.org/10.3368/jhr.58.5.0920-11206R1
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    2. Mark Regan & Barra Roantree, 2021. "Born under a bad sign: the impact of finishing school when labour markets are weak," IFS Working Papers W21/28, Institute for Fiscal Studies.
    3. Samuel Bentolila & Florentino Felgueroso & Marcel Jansen & Juan F. Jimeno, 2022. "Lost in recessions: youth employment and earnings in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 13(1), pages 11-49, May.
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    5. Choi, Eleanor Jawon & Choi, Jaewoo & Son, Hyelim, 2020. "The long-term effects of labor market entry in a recession: Evidence from the Asian financial crisis," Labour Economics, Elsevier, vol. 67(C).
    6. Aucejo, Esteban M. & French, Jacob & Ugalde Araya, Maria Paola & Zafar, Basit, 2020. "The impact of COVID-19 on student experiences and expectations: Evidence from a survey," Journal of Public Economics, Elsevier, vol. 191(C).
    7. Till von Wachter, 2020. "The Persistent Effects of Initial Labor Market Conditions for Young Adults and Their Sources," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 168-194, Fall.
    8. Christine E Bishop, 2022. "Economics of Aging: New Insights," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 77(4), pages 735-738.
    9. Richard Blundell & James P. Ziliak & Hugo Lopez, 2023. "Labour market inequality and the changing life cycle profile of male and female wages," IFS Working Papers W23/16, Institute for Fiscal Studies.
    10. Barth, Erling & Dale-Olsen, Harald & Schone, Pal & Ostbakken, Kjersti Misje, 2021. "Chutes and Ladders? Job Opportunities for Generation COVID," IZA Discussion Papers 14530, Institute of Labor Economics (IZA).
    11. Cristelli, Gabriele & Lissoni, Francesco, 2020. "Free movement of inventors: open-border policy and innovation in Switzerland," MPRA Paper 120099, University Library of Munich, Germany, revised Jan 2024.
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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