Young Adults and the Labor Market

This dissertation is comprised of two essays examining labor market outcomes of young adults within the last two decades. The first is motivated by critics of the U.S. education system\u27s current emphasis on 4-year college education who suggest the returns to a 2-year college degree, especially within a career and technology education (CTE) field, could exceed those to a 4-year degree. Evidence on this question has been lacking, in no small part due to the problem of accounting for selection of youth into different schooling choices, which depends on their verbal, math, and mechanical abilities (among other factors). I help fill this void by estimating a generalized Roy model using data from the National Longitudinal Survey of Youth 1997, in which youth choose among 5 college alternatives: no college, 2-year CTE, 2-year non-CTE, 4-year STEM (science, technology, engineering and mathematics), and 4-year non-STEM programs. The results permit me to construct consistent estimates of the expected cumulative earnings between the ages of 25 and 29 after each college choice for every individual in my sample. These counterfactual estimates reveal that 14% of current 4-year non-STEM students would expect higher early career earnings had they chosen the 2-year CTE path, yet the majority of these students would benefit even more from 4-year STEM pursuits. On average the 9% of high school graduates that maximize expected earnings from a 2-year CTE path, relative to all other college options, do not currently attend a four-year college. This paper finds these students do not simply possess low verbal and math abilities, but that a high mechanical ability is crucial in conferring a comparative advantage in earnings from 2-year CTE programs. This second essay within this dissertation estimates how narrowly-defined mismatches between employees and occupations affect young adult job mobility. I construct new measures of academic skill mismatch, technical skill mismatch, and educational mismatch using employee level data from the National Longitudinal Survey of Youth 1997 (NLSY97) and occupation-level data from the Occupational Information Network (O*NET). Skill mismatch measures capture the distance between an individual\u27s tested abilities (in percentile terms) and the reported skill requirements of an occupation (in similar percentile terms). Estimation of a Cox proportional hazards model of job tenure reveals that a ten point increase in academic skill mismatch increases a worker\u27s monthly hazard of leaving a job by 2.3%, yet technical skill mismatches have no effect. An employee is also 1.7% more likely to leave a job in any given month if ten percent fewer employees within their occupation possess the same level of education. The main benefit of my mismatch measures is their derivation from underlying individual and occupational characteristics. I demonstrate that these characteristics not only influence employee-occupation mismatch, but independently affect job turnover. Thus, their inclusion significantly alters estimates of how employee-occupation mismatches impact young adult job mobility