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American Economic Journal: Applied Economics: Vol. 4 No. 1 (January 2012)
The Short- and Long-Term Career Effects of Graduating in a Recession
Article Citation
Oreopoulos, Philip,
Till von Wachter, and
Andrew Heisz. 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession."
American Economic Journal: Applied Economics,
4(1): 1-29.
DOI: 10.1257/app.4.1.1
DOI: 10.1257/app.4.1.1
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)
Article Full-Text Access
Full-text Article (Complimentary)
Additional Materials
Online Appendix (451.80 KB)
Authors
Oreopoulos, Philip (U Toronto)
von Wachter, Till (Columbia U)
Heisz, Andrew (Statistics Canada)
von Wachter, Till (Columbia U)
Heisz, Andrew (Statistics Canada)
JEL Classifications
E32: Business Fluctuations; Cycles
I23: Higher Education and Research Institutions
J22: Time Allocation and Labor Supply
J23: Labor Demand
J31: Wage Level and Structure; Wage Differentials
I23: Higher Education and Research Institutions
J22: Time Allocation and Labor Supply
J23: Labor Demand
J31: Wage Level and Structure; Wage Differentials
