The Short- and Long-Term Effects of Graduating During a Recession: Evidence from Finland

Miika Matias Päällysaho

No 96, Working Papers from VATT Institute for Economic Research

Abstract: This paper uses matched employer-employee panel data on university graduates who obtained a Master’s degree in 1988–2004 to study how facing adverse economic conditions upon graduation affects short- and long-term labor market outcomes in Finland. Among all graduation cohorts, the average graduate faces large and persistent negative effects on real annual earnings that last for at least the first ten years after graduation. There is also a persistently higher probability of being unemployed that lasts for roughly seven years. When only considering the cohorts who graduated after the exceptionally deep Finnish 1990s depression, the effects on earnings only last for the first five years and there appear to be little to no effects on unemployment. Female graduates face smaller earnings losses on average, potentially reflecting gender differences in fields of study, employing sector and labor market attachment. The empirical results appear not to be significantly affected by selective timing or place of graduation.

Keywords: labor market; unemployment; business cycle fluctuation; higher education; Labour markets and education; E32; I23; J22; J23 (search for similar items in EconPapers)
Date: 2017
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