Good skills in bad times: Cyclical skill mismatch and the long-term effects of graduating in a recession
Salvanes, Kjell G
Sørensen, Erik Ø
European Economic Review
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Liu, K., Salvanes, K. G., & Sørensen, E. Ø. (2015). Good skills in bad times: Cyclical skill mismatch and the long-term effects of graduating in a recession. European Economic Review https://doi.org/10.1016/j.euroecorev.2015.08.015
We show that cyclical skill mismatch, defined as mismatch between the skills supplied by college graduates and skills demanded by hiring industries, is an important mechanism behind persistent career loss from graduating in recessions. Using Norwegian data, we find a strong countercyclical pattern of skill mismatch among college graduates. Initial labor market conditions have a declining but persistent effect on match quality and skill mismatch early in their careers. Match quality of the first employment may explain up to half of the short-term and most of the long-term earnings loss from graduating in a recession.
mismatch, unemployment, business cycle, education
We thank the editor and two anonymous referees for their constructive suggestions, and also Bart Cockx, Peter Gottschalk, Robert Moffitt, and the participants at several seminars and conferences for helpful comments and discussions. Sørensen acknowledges support from ESOP, Department of Economics, University of Oslo. This research is supported by the Research Council of Norway Grant 202445.
External DOI: https://doi.org/10.1016/j.euroecorev.2015.08.015
This record's URL: https://www.repository.cam.ac.uk/handle/1810/254270
Attribution-NonCommercial-NoDerivatives 4.0 International
Licence URL: http://creativecommons.org/licenses/by-nc-nd/4.0/
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