How Early Career Choices Adjust to Economic Crises

Julien Grenet (1, 2) , Hans Grönqvist (3, 4) , Edvin Hertegård (5) , Martin Nybom (6) , Jan Stuhler (7)

1 PSE - Paris School of Economics
2 PJSE - Paris Jourdan Sciences Economiques
3 Linnaeus University
4 IFN - Research Insitute of Industrial Economics
5 Stockholm University
6 Uppsala University
7 UC3M - Universidad Carlos III de Madrid [Madrid]

We study how students adjust their early career choices in response to economic crises, and how this behavioral response affects their long-run labor market outcomes. We specifically examine the context of the severe recession that struck Sweden in the early 1990s, which disproportionally affected the manufacturing and construction sectors. We find that students who experienced paternal job loss in these heavily affected sectors were more likely to choose high school programs linked to sectors less impacted by the recession. As a result, these individuals achieved better labor market outcomes in adulthood, including higher employment rates and career earnings. Our findings are consistent with informational frictions being a key obstacle to structural change, and we identify career choice as an important mechanism through which recessions reshape labor markets in the very long run.

Mots clés: High School Major; Recession; Information Frictions; Structural Change High School Major; Structural Change

Domaines: Economies et finances

Julien Grenet, Hans Grönqvist, Edvin Hertegård, Martin Nybom, Jan Stuhler. How Early Career Choices Adjust to Economic Crises. 2024. ⟨halshs-04431902⟩