Hannes Schwandt (Northwestern)

Abstract:

A growing literature has shown that graduating during a recessions has negative impacts on labor force participation and earnings which tend to fade out over 10 to 15 years. In this paper, we use data from the Census, the ACS, the CPS, and Vital Statistics to follow labor market entrants over three decades up to age 50. We find that some negative labor market impacts of graduating in a recession reappear in midlife, along with worse family formation outcomes and increases in mortality. In midlife, recession graduates earn less and work more, while facing reductions in welfare support. They are less likely to be married, more likely to be divorced and experience higher rates of childlessness. Negative impacts on longevity appear in the mid-thirties and further strengthen throughout age 50. These mortality impacts are driven by disease-related causes such as heart disease, lung cancer, and liver disease as well as drug overdoses (deaths of despair). Our findings demonstrate that mortality and economic outcomes in midlife can be impacted by transitory disadvantages during young adulthood such as economic conditions at labor market entry.