Events at CERGE-EI

Master Thesis Chair:
Štěpán Jurajda

Abstract:

This paper examines the effect of graduating from college during a recession on labor market outcomes in the Czech Republic, where tertiary education is mostly state-funded. I focus on workers who entered the labor market during 2006-2015, a period including the financial crisis and recession of 2008 and the subsequent recovery period. As an indicator of economic conditions, I use overall and youth unemployment rates. I find that an increase in the unemployment rate by 4 percentage points is associated with approximately a 8% reduction of annual earnings in the first year after graduation. Additionally, I study two channels of earnings’ reduction: the probability of being employed and probability of being employed in a “college” occupation after graduation. Both probabilities diminish significantly with an increase in unemployment rates. Overall, my results demonstrate that graduation at the time of recession has a significant negative impact on labor market outcomes of workers.

Keywords: Business Cycle, College Graduates, Cohort Effects