Make Your Own Luck: The Wage Gains from Starting College in a Bad Economy

Alena Bičáková, Guido Matias Cortes and Jacopo Mazza

No 16087, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using data for nearly 40 cohorts of American college graduates and exploiting regional variation in economic conditions, we show robust evidence of a positive relationship between the unemployment rate at the time of college enrollment and subsequent annual earnings, particularly for women. This positive relationship is not driven by selection into employment or by economic conditions at the time of labor market entry. It also cannot be explained by differential sorting into college majors or post-graduate education. Up to one third of the effect is accounted for by sorting towards more remunerative locations. The results are consistent with a behavioral change that induces individuals who experience bad economic times at the beginning of their studies to exert more effort toward obtaining higher paying jobs.

Keywords: cohort effects; higher education; business cycle (search for similar items in EconPapers)
JEL-codes: E32 I23 J24 J31 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2023-04
New Economics Papers: this item is included in nep-lma
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Published - published in: Labour Economics, 2023, 84, 102411

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Journal Article: Make your own luck: The wage gains from starting college in a bad economy (2023)
Working Paper: Make Your Own Luck: The Wage Gains from Starting College in a Bad Economy (2021)
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