Events at CERGE-EI

You can join the seminar in person at the following address:
CERGE-EI, Politických vězňů 7, Praha 1, room 402
or online at: https://cerge-ei.webex.com/cerge-ei/j.php?MTID=m5c13a001b6a2636b39d247b5a9bb6330
Meeting number: 2741 818 6936
Meeting password: 883964

Presenter: Margarita Pavlova (This email address is being protected from spambots. You need JavaScript enabled to view it.)

Title: "Graduates in a Cycle: Effect of Early-Career Recessions on Labor Market Outcomes of College Graduates"

Abstract:
This paper examines the long-term impact of economic conditions at and after college graduation on labor market outcomes, with a particular focus on the timing of graduation relative to the phase of business cycle. Using data from four major U.S. recessions (1981–1982, 1990, 2001, and 2008–2009), I compare cohorts who graduated just before a recession with those who graduated after, once unemployment had returned to pre-recession levels. On average, graduates who enter the workforce before a recession experience a 19% earnings loss, though the magnitude varies across recessions. To account for the broader economic trajectory beyond initial labor market entry, I construct the accumulated unemployment rate, which captures economic conditions in the two years following graduation. A one percentage point increase in this measure is associated with an average decline of 0.3% in earnings over the first ten years after graduation. Applying this estimate to the case of graduates in 2007, who faced a prolonged economic downturn at the beginning of their career, suggests an average earnings loss of 1.5% compared to individuals who graduated after the Great Recession under comparable unemployment conditions. These findings highlight the importance of both initial labor market conditions and subsequent economic trends in shaping career outcomes. By considering the trajectory of new labor market entrants, this study contributes to the literature on recession-induced scarring effects.