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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.

Suggested Citation

  • 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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    Cited by:

    1. Ioannis Kospentaris & Leslie S. Stratton, 2025. "The evolution of labor market disparities between Hispanic and non-Hispanic men: 1970–2019," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(1), pages 1-21, March.
    2. Daniel Cooper & Olga Gorbachev & María José Luengo‐Prado, 2023. "Consumption, Credit, and the Missing Young," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(2-3), pages 379-405, March.
    3. Jeremy Kirk, 2024. "The Impact of Parental Resources on Human Capital Investment and Labor Market Outcomes: Evidence from the Great Recession," Working Papers 24-34, Center for Economic Studies, U.S. Census Bureau.
    4. 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.
    5. 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.
    6. Eduardo Ignacio Polo-Muro, 2021. "The effect of labor market shocks on mental health outcomes: evidence from the Spanish Great Recession," Working Papers 21.08, Universidad Pablo de Olavide, Department of Economics.
    7. 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).
    8. 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).
    9. Ege Aksu & Sidhya Balakrishnan & Eric Bettinger & Jonathan S. Hartley & Michael S. Kofoed & Dubravka Ritter & Douglas A. Webber, 2024. "Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection"," Working Papers 24-07, Federal Reserve Bank of Philadelphia.
    10. 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.
    11. 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.
    12. Richard Blundell & Hugo Lopez & James P. Ziliak, 2025. "Labor Market Inequality and the Changing Life Cycle Profile of Male and Female Wages," American Economic Journal: Applied Economics, American Economic Association, vol. 17(4), pages 100-133, October.
    13. 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).
    14. Cristelli, Gabriele & Lissoni, Francesco, 2020. "Free movement of inventors: open-border policy and innovation in Switzerland," MPRA Paper 107433, University Library of Munich, Germany.
    15. Prudencio, Daniel & Balmori-de-la-Miyar, Jose & Silverio-Murillo, Adan & Sobrino, Fernanda, 2024. "Examining COVID-19’s disruptive effect on education in Mexican universities," International Journal of Educational Development, Elsevier, vol. 111(C).
    16. Fukuda, Akira, 2025. "Entrepreneurship of the ice age cohorts," Journal of the Japanese and International Economies, Elsevier, vol. 77(C).
    17. Kamila Cygan-Rehm, 2022. "Lifetime Consequences of Lost Instructional Time in the Classroom: Evidence from Shortened School Years," CESifo Working Paper Series 9892, CESifo.
    18. Chaturvedi, Sugat & Mahajan, Kanika & Siddique, Zahra, 2025. "Gendered language in job ads and applicant behavior: Evidence from India," Labour Economics, Elsevier, vol. 96(C).
    19. Richard J. Paulsen, 2022. "Arts majors and the Great Recession: a cross-sectional analysis of educational choices and employment outcomes," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(4), pages 635-658, December.
    20. Shisham Adhikari & Athanasios Geromichalos & Ates Gursoy & Ioannis Kospentaris, 2025. "How much work experience do you need to get your first job?: The macroeconomic implications of bias against labor market entrants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 58, October.
    21. Felipe Alves & Giovanni L. Violante, 2024. "From Micro to Macro Hysteresis: Long-Run Effects of Monetary Policy," Staff Working Papers 24-39, Bank of Canada.
    22. Berniell, Inés & Gasparini, Leonardo & Marchionni, Mariana & Viollaz, Mariana, 2023. "Lucky women in unlucky cohorts," Journal of Development Economics, Elsevier, vol. 161(C).
    23. Garrett Anstreicher, 2020. "Family Formation and the Great Recession," Working Papers 20-42, Center for Economic Studies, U.S. Census Bureau.

    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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