THE EFFECTS OF GRADUATING FROM COLLEGE DURING A RECESSION ON LIVING STANDARDS

Daiji Kawaguchi and Ayako Kondo

Economic Inquiry, 2020, vol. 58, issue 1, 283-293

Abstract: Graduating from college during a recession has persistent negative effects on labor‐market outcomes. This study assesses the welfare impact of a recession at entry by analyzing family formation behaviors and asset holdings. Scrutiny of the National Longitudinal Survey of Youth 1979 (NLSY79) reveals that despite a decline in hourly wages, business cycle conditions at entry to the labor market do not affect family formation, car or home ownership, or net asset holdings in the long run. Evidence suggests that individuals who graduate in bad times tend to move to states with lower living costs to secure living standards. (JEL E21)

Date: 2020
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