Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1545: How Early Career Choices Adjust to Economic Crises

Juliet Grenet (), Hans Grönqvist (), Edvin Hertegård (), Martin Nybom () and Jan Stuhler ()
Additional contact information
Juliet Grenet: Paris School of Economics and CNRS
Hans Grönqvist: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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

JEL-codes: E32; I25; J24; J63

Language: English

56 pages, December 3, 2025

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