Liu, K., Salvanes, K.G. and Sørensenb, E. Ø.

Good skills in bad times: cyclical skill mismatch and the long-term effects of graduating in a recession

European Economic Review

(2015)

Abstract: We show that cyclical skill mismatch, defined as mismatch between the skills supplied by college graduates and skills demanded by hiring industries, is an important mechanism behind persistent career loss from graduating in recessions. Using Norwegian data, we find a strong countercyclical pattern of skill mismatch among college graduates. Initial labor market conditions have a declining but persistent effect on match quality and skill mismatch early in their careers. Match quality of the first employment may explain up to half of the short-term and most of the long-term earnings loss from graduating in a recession.

Keywords: Mismatch, Unemployment, Business cycle, Education

JEL Codes: E32, J31, J62

Author links: Kai Liu

Publisher's Link: https://doi.org/10.1016/j.euroecorev.2015.08.015