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The long-term effects of labor market entry in a recession: Evidence from the Asian financial crisis.

ABSTRACT: This study investigates the long-term effects of initial labor market conditions by comparing cohorts who graduated from college before, during, and after the 1997-1998 Asian financial crisis in South Korea. We measure the overall welfare effect by examining their labor market activities, family formation, and household finances. Using data from 20 waves of the Korean Labor and Income Panel Study, we find a substantial and persistent reduction in employment, earnings, marriage, fertility, and asset building among men who graduated during the recession. For women, limited job opportunities at graduation resulted in an increase in childbearing. We also find evidence that family provides a risk-sharing mechanism for recession graduates. Our results suggest that labor market entry in a large-scale recession has prolonged effects on a young worker's life course even after the penalties in the labor market have disappeared.

SUBMITTER: Choi EJ

PROVIDER: S-EPMC7510546 | biostudies-literature | 2020 Dec

REPOSITORIES: biostudies-literature

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The long-term effects of labor market entry in a recession: Evidence from the Asian financial crisis.

Choi Eleanor Jawon EJ Choi Jaewoo J Son Hyelim H

Labour economics 20200923

This study investigates the long-term effects of initial labor market conditions by comparing cohorts who graduated from college before, during, and after the 1997-1998 Asian financial crisis in South Korea. We measure the overall welfare effect by examining their labor market activities, family formation, and household finances. Using data from 20 waves of the Korean Labor and Income Panel Study, we find a substantial and persistent reduction in employment, earnings, marriage, fertility, and as ...[more]

PMID: 32989344

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Early-career trajectories of young workers in the U.S. in the context of the 2008-09 recession: The effect of labor market entry timing.

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Beyond the Great Recession: Labor Market Polarization and Ongoing Fertility Decline in the United States.

Project description:In the years since the Great Recession, social scientists have anticipated that economic recovery in the United States, characterized by gains in employment and median household income, would augur a reversal of declining fertility trends. However, the expected post-recession rebound in fertility rates has yet to materialize. In this study, I propose an economic explanation for why fertility rates have continued to decline regardless of improvements in conventional economic indicators. I argue that ongoing structural changes in U.S. labor markets have prolonged the financial uncertainty that leads women and couples to delay or forgo childbearing. Combining statistical and survey data with restricted-use vital registration records, I examine how cyclical and structural changes in metropolitan-area labor markets were associated with changes in total fertility rates (TFRs) across racial/ethnic groups from the early 1990s to the present day, with a particular focus on the 2006-2014 period. The findings suggest that changes in industry composition-specifically, the loss of manufacturing and other goods-producing businesses-have a larger effect on TFRs than changes in the unemployment rate for all racial/ethnic groups. Because structural changes in labor markets are more likely to be sustained over time-in contrast to unemployment rates, which fluctuate with economic cycles-further reductions in unemployment are unlikely to reverse declining fertility trends.

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