Unlucky Labor Market Entry and Resilience in Subsequent Shocks

Matti Hovi () and Sami Remes ()
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Matti Hovi: Tampere University and Finnish Center of Excellence in Tax Systems Research FIT
Sami Remes: Tampere University and Finnish Center of Excellence in Tax Systems Research FIT

No 24, Working Papers from Finnish Centre of Excellence in Tax Systems Research

Abstract: This study investigates how labor market conditions at graduation affect individual’s labor market outcomes when facing employment shocks in later career, specifcally due to plant closures. We focus on university graduates and vocational school graduates as two distinct groups. Our findings reveal that the long-term earnings loss following a plant closure is 175% higher for those university graduates who entered the labor market during periods of high regional unemployment. Additionally, these unlucky university graduates are more likely to work in lower quality firms. Among vocational school graduates, we do not find a similar additional negative effect on earnings or employment quality for unlucky graduates. Instead, our results suggest higher labor market activity compared to the luckiest graduates.

Keywords: Displacement; Plant closure; Business cycle; Recession; Graduation (search for similar items in EconPapers)
JEL-codes: E32 J21 J24 J65 (search for similar items in EconPapers)
Pages: 83
Date: 2024-08
New Economics Papers: this item is included in nep-lab and nep-mac
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Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research

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Persistent link: https://EconPapers.repec.org/RePEc:fit:wpaper:24

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