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Timing is Everything: Labor Market Winners and Losers during Boom-Bust Cycles

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  • Poelhekke, Steven
  • Katovich, Erik
  • Parker, Dominic

Abstract

Sectoral expansions and contractions require labor reallocation between declining and booming sectors. Which types of workers gain and lose during these transitions? Using linked employer-employee panel data from Brazil spanning a boom-bust cycle in its oil and gas sector, we find that timing of labor market entry is critical. Only highly educated workers hired at the onset of a boom reap significant earnings and employment benefits. Low-education workers and later entrants experience earnings and employment penalties, reflecting a last-in, first-out pattern. We show the boom induced rapid growth in sector-specific education and a mistimed glut of specialized graduates, dissipating earnings.

Suggested Citation

  • Poelhekke, Steven & Katovich, Erik & Parker, Dominic, 2023. "Timing is Everything: Labor Market Winners and Losers during Boom-Bust Cycles," CEPR Discussion Papers 17887, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17887
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    More about this item

    Keywords

    Boom and bust cycles; Labor reallocation; Human capital; Inequality; Inequality; Energy transition;
    All these keywords.

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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