Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272714 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16087
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using data for nearly 40 cohorts of American college graduates and exploiting regional variation in economic conditions, we show robust evidence of a positive relationship between the unemployment rate at the time of college enrollment and subsequent annual earnings, particularly for women. This positive relationship is not driven by selection into employment or by economic conditions at the time of labor market entry. It also cannot be explained by differential sorting into college majors or post-graduate education. Up to one third of the effect is accounted for by sorting towards more remunerative locations. The results are consistent with a behavioral change that induces individuals who experience bad economic times at the beginning of their studies to exert more effort toward obtaining higher paying jobs.
Subjects: 
business cycle
higher education
cohort effects
JEL: 
I23
J24
J31
E32
Document Type: 
Working Paper

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