How Early Career Choices Adjust to Economic Crises

Julien Grenet (), Hans Grönqvist (), Edvin Hertegård (), Martin Nybom () and Jan Stuhler ()
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Julien Grenet: Paris School of Economics and CNRS
Hans Grönqvist: Linnaeus University and the Research Institute of Industrial Economics (IFN)
Edvin Hertegård: Swedish Institute for Social Research, Postal: SOFI, Stockholm University, SE-106 91 Stockholm, Sweden
Martin Nybom: IFAU
Jan Stuhler: Universidad Carlos III de Madrid

No 11/2025, SOFI Working Papers in Labour Economics from Stockholm University, Swedish Institute for Social Research

Abstract: We study how students adjust their early career choices in response to economic crises and how these decisions affect their long-run labor market outcomes. Focusing on Sweden’s deep recession in the early 1990s—which hit the manufacturing and construction sectors hardest—we first show that students whose fathers lost jobs in these sectors were more likely to choose career paths tied to less-affected industries. These students later experienced better labor market outcomes, including higher employment and earnings. Our findings suggest that informational frictions are a key obstacle to structural change and identify career choice as an important channel through which recessions reshape labor markets in the long run.

Keywords: high school major; recession; information frictions; structural change (search for similar items in EconPapers)
JEL-codes: E32 I25 J24 J63 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2025-08-07
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