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

Author Info

Listed author(s):
  • 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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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/app.4.1.1
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File URL: http://www.aeaweb.org/aej/app/app/2009-0288_app.pdf
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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
Contact details of provider: Web page: https://www.aeaweb.org/aej-applied
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Keywords:

Find related papers by JEL classification:

  • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
  • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
  • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
  • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

References listed on IDEAS
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  6. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2006. "The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates," NBER Working Papers 12159, National Bureau of Economic Research, Inc.
  7. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-188, January.
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  29. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective: Corrigendum," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 767-767, September.
  30. Johannes F. Schmieder & Till von Wachter, 2010. "Does Wage Persistence Matter for Employment Fluctuations? Evidence from Displaced Workers," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 1-21, July.
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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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