(Not) getting a job in a recession

From a new paper in the Journal of Economic Perspectives on the effects of entering a labour market in a recession:

the effect of graduating from college in a recession leads to a sharp initial reduction in annual earnings of about 10 percent that fades after about ten years in the labor market…

…the effect for high-school graduates is about double the effect for college graduates and more persistent. Yet all education groups tend to see a recovery after about ten years in the labor market

The findings suggest you should be cautious about jumping into the first role on offer:

The general finding is that the persistent effects are driven by the very first exposure to unemployment rates alone, though persistent slack tends to lead to longer-term effects

The wage effects are not as serious as my priors would have suggested, although compounded over a lifetime, the losses are still large. However, the health effects are quite dire:

starting in their late 30s, unlucky entrants begin experiencing a gap in mortality
compared to luckier peers that keeps increasing in their 40s, driven by higher rates
of heart disease, liver disease, lung cancer, and drug overdoses.

Finally, there are benefits to not doing an MBA…

For some groups, such as PhD economists and possibly MBA graduates, an initial occupation choice permanently affects career outcomes

There is much more interesting information in the paper, which is free to read. Please check it out.

(Thanks to MR for the heads up.)

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