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How Early Career Choices Adjust to Economic Crises

Author

Listed:
  • Grenet, Julien

    (Paris School of Economics and CNRS)

  • Grönqvist, Hans

    (Linnaeus University and the Research Institute of Industrial Economics (IFN))

  • Hertegård, Edvin

    (Swedish Institute for Social Research)

  • Nybom, Martin

    (IFAU)

  • Stuhler, Jan

    (Universidad Carlos III de Madrid)

Abstract

We study how students adjust their early career choices in response to economic crises and how these decisions affect their long-run labor market outcomes. Focusing on Sweden’s deep recession in the early 1990s—which hit the manufacturing and construction sectors hardest—we first show that students whose fathers lost jobs in these sectors were more likely to choose career paths tied to less-affected industries. These students later experienced better labor market outcomes, including higher employment and earnings. Our findings suggest that informational frictions are a key obstacle to structural change and identify career choice as an important channel through which recessions reshape labor markets in the long run.

Suggested Citation

  • Grenet, Julien & Grönqvist, Hans & Hertegård, Edvin & Nybom, Martin & Stuhler, Jan, 2025. "How Early Career Choices Adjust to Economic Crises," SOFI Working Papers in Labour Economics 11/2025, Stockholm University, Swedish Institute for Social Research.
    • Handle: RePEc:hhs:sofile:2025_011
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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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