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Predicted Earnings Losses from Graduating during COVID-19

Author

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  • Derek Messacar
  • Tomasz Handler
  • Marc Frenette

Abstract

Poor labour market conditions at the start of a worker’s career can result in earnings losses for many years. The 2021 cohort of Canadian high school and post-secondary students have seen employment prospects diminish amid economic lockdowns to contain the spread of coronavirus disease 2019 (COVID-19). The goal of this article is to predict earnings losses for this cohort. We use Census of Population data to show that a 1 percent increase in unemployment at the time of graduation leads to a 1.5–4 percent average decrease in earnings. Then, using unemployment rate forecasts from various sources, we predict how this year’s graduating class is expected to fare. Our approach assumes previous recessions are informative about the effects of the current recession. We estimate that a typical 2021 graduate loses 5–12 percent of the amount they would have earned over the first few years if the pandemic had not occurred.

Suggested Citation

  • Derek Messacar & Tomasz Handler & Marc Frenette, 2021. "Predicted Earnings Losses from Graduating during COVID-19," Canadian Public Policy, University of Toronto Press, vol. 47(2), pages 301-315, June.
    • Handle: RePEc:cpp:issued:v:47:y:2021:i:2:p:301-315
    DOI: 10.3138/cpp.2020-109
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    Cited by:

    1. Fang, Tony & Gunderson, Morley & Ha, Viet Hoang & Ming, Hui, 2024. "Intersectional Analysis of the Labour Market Impacts of COVID: The Triple-Whammy of Females, Children, and Lower Skill," IZA Discussion Papers 17235, Institute of Labor Economics (IZA).
    2. Kam C. Chan & Samuel Chang & Jean C. Snavely, 2022. "Effects of financial literacy on graduate school attitudes amidst COVID‐19," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2003-2015, September.
    3. Pierre Brochu & Jonathan Créchet, 2021. "Survey Non-response in Covid-19 Times: The Case of the Labour Force Survey," Working Papers 2109E, University of Ottawa, Department of Economics.

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