Wages, Hours, and the School-to-Work Transition: The Consequences of Leaving School in a Recession for Less-Educated Men

Using the NLSY’s weekly work history data to precisely measure labor market outcomes and the school-to-work transition, I document severe but short-lived effects of leaving school in a recession for men with 9–12 years of education. I find significant effects of entry labor market conditions on wages, job quality, and the transition time from school to work. In contrast to published evidence on more educated workers, I also find large effects on work hours on both the extensive and the intensive margins. When workers leave high school in a recession, they take substantially longer to find a job, earn lower wages, and work fewer full-time weeks and more part-time weeks. A 4-point rise in the initial unemployment rate leads to an increase in the school-to-work transition time of 9 weeks, a 16% decline in year-one average wage, a 28% fall in hours worked in the first year, and a 45% decline in first-year earnings. However, effects of entry conditions are not persistent and are largely gone after the first year.