Yes, It’s True: Recessions Though Temporary Have Long-Lasting Effects On Careers, Says NBER Study

A new National Bureau of Economic Research (NBER) working paper has found that students who graduate from the university during times of recession, start out earning significantly less on average than those who finished their studies during better times, The Economist has reported .

A recession is usually defined as a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

The study conducted by economists from Northwestern University and the University of California, Los Angeles, used US Census data from 1976 to 2015 to arrive at its findings. Students who begin their working life in times of recession, earn 11 per cent less on an average than if they had started out in times of boom. Though 11 per cent might seem small, the drop in earnings last for 10 years and represent a cumulative (added over 10 years) losses worth about 60 per cent of a year’s salary.

The study also found that the effects of the downturn are unevenly divided and it affects more adversely those who enter the workforce without a college degree. The authors also stated that recessions push up poverty rates among young workers for five years after they enter the labour market.