Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
Good Skills in Bad Times: Cyclical Skill Mismatch and the Long-term Effects of Graduating in a Recession.
(), Kjell G. Salvanes
() and Erik Ø. Sørensen
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 the
probability of mismatch early in their careers. We provide a simple model
of industry mobility that is consistent with our empirical findings. The
initially mismatched graduates are also more vulnerable to business cycle
variations at the time of graduation.
Keywords: Skill mismatch; business cycles; (follow links to similar papers)
JEL-Codes: E32; J31; J62; (follow links to similar papers)
40 pages, August 17, 2012
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