Make Your Own Luck: The Wage Gains from Starting College in a Bad Economy

CERGE-EI Working Paper Series No. 698

25 Pages Posted: 18 Nov 2021

See all articles by Alena Bicakova

Alena Bicakova

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Guido Matias Cortes

York University

Jacopo Mazza

University of Essex

Date Written: October 1, 2021

Abstract

Using data for nearly 40 cohorts of American college graduates and exploiting regional variation in economic conditions, we show robust evidence of a positive relationship between the unemployment rate at the time of college enrollment and subsequent annual earnings, particularly for women. This positive relationship cannot be explained by selection into employment or by economic conditions at the time of graduation. Changes in major field of study account for only about 10% of the observed earnings gains. The results are consistent with intensified effort exerted by students who experience bad economic times at the beginning of their studies.

Keywords: Business Cycle, Higher Education, Cohort Effects

JEL Classification: I23, J24, J31, E32

Suggested Citation

Bicakova, Alena and Cortes, Guido Matias and Mazza, Jacopo, Make Your Own Luck: The Wage Gains from Starting College in a Bad Economy (October 1, 2021). CERGE-EI Working Paper Series No. 698, Available at SSRN: https://ssrn.com/abstract=3939130 or http://dx.doi.org/10.2139/ssrn.3939130

Alena Bicakova (Contact Author)

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

Guido Matias Cortes

York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Jacopo Mazza

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

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