Scandinavian Working Papers in Economics
Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy
No 2025:20: How early career choices adjust to economic crises
Julien Grenet (), Hans Grönqvist (), Edvin Hertegård (), Martin Nybom () and Jan Stuhler ()
Additional contact information
Julien Grenet: Paris School of Economics and CNRS
Hans Grönqvist: Linnaeus University and the Research Institute of Industrial Economics (IFN)
Edvin Hertegård: SOFI, Stockholm University
Martin Nybom: IFAU, Uppsala University
Jan Stuhler: Department of Economics, Universidad Carlos III de Madrid
Abstract: We study how students adjust their early career choices in response to economic crises and how these decisions affect their long-run labor market outcomes. Focusing on Sweden’s deep recession in the early 1990s—which hit the manufacturing and construction sectors hardest—we first show that students whose fathers lost jobs in these sectors were more likely to choose career paths tied to less-affected industries. These students later experienced better labor market outcomes, including higher employment and earnings. Our findings suggest that informational frictions are a key obstacle to structural change and identify career choice as an important channel through which recessions reshape labor markets in the long run.
Keywords: High School Major; Recession; Information Frictions; Structural Change
Language: English
58 pages, November 13, 2025
Full text files
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