Graduating High School in a Recession: Work, Education, and Home Production

Abstract

This paper explores how high school graduate men and women vary in their behavioral responses to beginning labor market entry during a recession. In contrast with previous related literature that found a substantial negative wage impact but minimal employment impact in samples of highly educated men, the empirical evidence presented here suggests a different outcome for the less well educated, and between the sexes. Women, but not men, who graduate high school in an adverse labor market are less likely to be in the workforce for the next four years, but longer-term effects are minimal. Further, while men increase their enrollment as a short-run response to weak labor demand, women do not; instead, they appear to temporarily substitute into home production. Women’s wages are less affected then men’s, and both groups’ wages are less affected than the college graduates previously studied.

Differential effects of graduating during a recession across gender and race

“…He finds that the long-term effects of graduating high school in a recession on wages are minimal for women and that young women who face adverse labor market conditions temporarily reduce labor supply and substitute into home production. 4 I believe this study complements that of Hershbein (2012) because my approach is different from his. First, while Hershbein (2012) focuses on the effect of the unemployment rate at high school graduation for all individuals including those who proceed to college, I focus on the effect of the unemployment rate in the last year of enrollment.…”

“…4 I believe this study complements that of Hershbein (2012) because my approach is different from his. First, while Hershbein (2012) focuses on the effect of the unemployment rate at high school graduation for all individuals including those who proceed to college, I focus on the effect of the unemployment rate in the last year of enrollment. Furthermore, I measure differences across and within racial groups.…”

“…9 This process follows Kahn (2010) and other existing studies using the NLSY79. 10 Some existing studies use sampling weights (Maclean 2014(Maclean , 2015, but others do not (Kahn 2010;Hershbein 2012;Speer 2015). Since the unemployment rate at entry is unlikely to be correlated with the sampling weights, using the sampling weights would not change the results much.…”

“…Furthermore, I measure differences across and within racial groups. In addition, methodologically, Hershbein (2012) uses the national unemployment rate as the explanatory variable, whereas I use the state unemployment rate and control for state fixed effects and nationwide year effects. The comparison between whites and blacks is closely related to the literature on the differential effects of a recession at entry across groups with different skill levels and educational backgrounds.…”

Does leaving school in an economic downturn impact access to employer-sponsored health insurance?

“…Moreover, individuals who leave school in an economic downturn hold less prestigious jobs and are less likely to be promoted (Kahn 2010;Kwon et al 2010;Schoar and Zuo 2011). However, women's labor market outcomesrelative to men's outcomes -appear to be less influenced by economic conditions faced at school-leaving market (Hershbein 2012;Kondo 2007).…”