Graduating into a recession

We investigate labour market outcomes among persons who graduated from college during a recession in Spain. We use administrative data that allow for longitudinal analysis for a large sample of workers. The main result is that men and women who enter the labor market in a period of rising unemployment experience a significant loss of earnings in comparison with cohorts entering just before or after the downturn. However, we find that earnings differentials become insignificant by the third year after graduation for men, and by the fifth year for women. Almost all earnings losses among unlucky college graduates appear to be caused by joblessness: the brunt of adjustment takes place through employment rather than wages.In writing this paper we have benefited from comments by Steve Bond, Julio Cáceres, Rodolfo Campos, Ricardo Mora, Jan Stuhler, and participants at UC3M research seminar. Iliana Reggio acknowledges financial support by the Spanish Ministerio de Ciencia y Tecnología (Grant ECO2015- 65204-P)