Bad start, bad match? The early career effects of graduating in a recession for vocational and academic graduates

Abstract

I estimate the effect of graduating in a recession on the early careers of high-educated vocational and academic graduates in the Netherlands between 1996 and 2012. Exploiting field-specific differences in economic conditions at graduation, I find that academic graduates suffer a 10% lower wage per percentage point decline in field-specific employment at graduation. The wage loss fades out six years after graduation. For vocational graduates I find substantially smaller effects at 6% initially, but they remain persistent at 1% after 8 years on the labor market. Employment effects are small. Poor entry conditions are associated with an increased probability of mismatch and employment at lower paying employers. The primary mechanism through which graduates catch up is mobility across jobs and sectors to better paying employers. Job mobility resolves the mismatch for academic graduates after 4 years on the labor market, while vocational graduates remain persistently more likely to be mismatched.