Good skills in bad times: Cyclical skill mismatch and the long-term effects of graduating in a recession

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 o...

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Bibliographic Details
Published inEuropean economic review Vol. 84; pp. 3 - 17
Main Authors Liu, Kai, Salvanes, Kjell G., Sørensen, Erik Ø.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.05.2016
Elsevier Sequoia S.A
Subjects
Business cycle
College graduates
Earnings
Education
Employment
Hiring
Labor market
Long term
Mismatch
Recessions
Skills
Studies
Unemployment
Norway
E32
Business cycle
Education
J62
J31
Mismatch
Unemployment
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ISSN0014-2921
1873-572X
DOI10.1016/j.euroecorev.2015.08.015

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Summary: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.
Bibliography:SourceType-Scholarly Journals-1
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ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2015.08.015