The importance of social skills in recovery from graduating in a recession

Abstract

I study how the impacts of initial unemployment conditions on labor market returns vary for US college graduates with different levels of cognitive and social skills. Using the NLSY79 whose respondents graduated from college between 1979 and 1989, I find that the cost of recessions is substantial and unequal. The different roles of skills in workers’ careers explain a large degree of heterogeneity in the costs of labor market shocks at graduation. When a worker with higher social skills graduates in a recession, she widens her advantage mostly through higher academic attainment and mobility toward highly rated and high-skilled occupations.