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Unlucky Labor Market Entry and Resilience in Subsequent Shocks

Author

Listed:
  • Matti Hovi

    (Tampere University and Finnish Center of Excellence in Tax Systems Research FIT)

  • Sami Remes

    (Tampere University and Finnish Center of Excellence in Tax Systems Research FIT)

Abstract

This study investigates how labor market conditions at graduation affect individual’s labor market outcomes when facing employment shocks in later career, specifcally due to plant closures. We focus on university graduates and vocational school graduates as two distinct groups. Our findings reveal that the long-term earnings loss following a plant closure is 175% higher for those university graduates who entered the labor market during periods of high regional unemployment. Additionally, these unlucky university graduates are more likely to work in lower quality firms. Among vocational school graduates, we do not find a similar additional negative effect on earnings or employment quality for unlucky graduates. Instead, our results suggest higher labor market activity compared to the luckiest graduates.

Suggested Citation

  • Matti Hovi & Sami Remes, 2024. "Unlucky Labor Market Entry and Resilience in Subsequent Shocks," Working Papers 24, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:24
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    More about this item

    Keywords

    Displacement; Plant closure; Business cycle; Recession; Graduation;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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