Scandinavian Working Papers in Economics

Working Papers in Economics and Statistics,
Linnaeus University, School of Business and Economics, Department of Economics and Statistics

No 1/2025: 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: Department of Economics and Statistics, Postal: Department of Economics and Statistics, School of Business and Economics, Linnaeus University, 351 95 Växjö, 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, November 30, 2025

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25-01_Early-Career-C...-Economic-Crises.pdf PDF-file Full text

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