The Long-Term Effects of Labor Market Entry in a Recession: Evidence from the 1997-1998 Asian Financial Crisis

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Early Career Research Award


In this paper, we investigate the long-term effect of entering the job market during the 1997–1998 Asian financial crisis upon college graduation. We estimate the impact on labor market and family outcomes, such as employment, earnings, marriage, divorce, and child bearing. Using fluctuations in unemployment rates, previous research has documented the long-term adverse impacts on labor market outcomes of economic conditions at the time of labor market entry. Nevertheless, direct evidence on the consequences of an abrupt and severe recession stemming from a financial crisis has been understudied. We contribute to the literature in two aspects. First, by utilizing the shock from the Asian financial crisis, we estimate the long-term impact of labor market entry during a severe and abrupt downturn, which will have implications for the recent Great Recession. Second, by investigating both labor market and family formation outcomes, we are able to estimate the overall welfare impact of labor market entry during a crisis.