Caught in the Cycle: Economic Conditions at Enrolment and Labour Market Outcomes of College Graduates

Abstract We show that cohorts of male graduates who start college during worse economic times earn higher average wages than those who start during better times. This is not explained by differences in selection into employment, economic conditions at graduation, or field of study choices. Graduates who enrol in bad times are not more positively selected based on their high-school outcomes, but they achieve higher college grades and earn higher wages conditional on their grades. Patterns for female graduates are similar, though less robust. Our results suggest that individuals who enrol during downturns exert more effort during their studies.