For the young, the recession can last long

A National Bureau of Economic Research (NBER) study shows that for those coming of age in times of recession the damage could be more lasting

Nikita Kwatra
Updated1 Apr 2020, 11:41 PM IST
Those entering the job market during a recession face higher risk of disease and death, shows a new study.ht
Those entering the job market during a recession face higher risk of disease and death, shows a new study.ht

As the global economy is set to take another plunge into recession, a National Bureau of Economic Research (NBER) study shows that for those coming of age in times of recession the damage could be more lasting.

The study authored by Hannes Schwandt and Till M. von Wachter of the US shows that those who graduated during the deep recession of the early 1980s suffer higher risk of mortality between the ages of 30 and 50, compared to other cohorts. The authors link these high rates of mortality to higher unemployment at the time this age group was entering the job market. According to the authors, a 3.9 percentage point increase in entry unemployment rate can reduce life expectancy by six to nine months.

The authors’ findings are based on data from the census, American Community Survey, and US vital statistics, a dataset that provides information on every death in the US since 1968. The authors find that these increases in mortality are linked to lung cancer, liver disease, and drug poisoning.

They also find that there could be several long-run effects for those graduating or entering the job market during a recession, which can show up in middle age. For instance, they find that such individuals are less likely to be married, more likely to be divorced, and likely to have higher rates of childlessness. The authors suggest that entering the job market in a recession leads to large initial losses in earnings and employment. This means these cohorts accumulate less wealth over time.

This could be the reason behind lower socioeconomic well-being of these cohorts, according to the authors. This suggests that the costs of entering the job market during recession go beyond the loss in initial earnings. These could be more long term and greater than previously understood.

Also read: Socioeconomic decline and death: Midlife impacts of graduating in a recession

Snap Fact features new and interesting reads from the world of research.

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First Published:1 Apr 2020, 11:41 PM IST
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