UC Berkeley

It has been widely known that recessions negatively impact the labor market and social outcomes of individuals who graduate during them, but little attention was devoted to examining how recessions affect individuals who become of age during them. This dissertation aims at exploring how recessions affect the transition into adulthood and the occupational characteristics of individuals who become of age during them.

In chapter 1, I document that high unemployment rates faced at the start of adulthood have effects on a range of transition into adulthood outcomes. I find that young adults who experience high unemployment rates at or around age 18 have significantly higher probabilities of living with their parents throughout their 20s. Other outcomes reflect heterogeneous responses to economic circumstances. High unemployment rates early in adulthood induce some young adults to get married earlier than they otherwise would, in their late teens rather than early/mid 20s, while others are delayed from marrying in their early/mid 20s to the late 20s. High early unemployment rates influence young adults to attend college and complete college earlier than their luckier counterparts. These outcomes are interconnected with labor market factors: High unemployment in early adulthood positively affects the joint outcome of living with parent(s) and having low earnings, effects that persist up to age 26.

In chapter 2, I draw from the empirical strategy employed in chapter 1, but instead primarily focus on analyzing labor market outcomes. I explore how becoming of age during times of high unemployment rates affects the occupation quality of employed young adults. I study effects on various occupation quality measures. First, I study how unemployment rates at the start of adulthood affect working in a low or high paying occupation. Second, I analyze effects on working in a more or less productive occupation measured by the average occupation specific hours of labor. Third, I explore how unemployment rates affect the probabilities of working in a predominantly abstract, routine, or manual oriented occupation. Finally, I explore effects on the occupation specific injury rate that young adults are employed in. I find that higher unemployment rates faced at age 18 influence young adults to be employed in less productive occupations during early adulthood. Conditions do not affect being employed in a higher or lower paying occupation. In the early ages into adulthood, conditions increase the likelihood of being employed in abstract oriented occupations while decreasing the likelihood of employment in routine or manual oriented occupations. Finally, I find that early conditions have heterogeneous effects on the occupation specific injury rate. At ages 19 through 22 conditions influence young adults to be employed in occupations that are less risky -- those that have reductions in reported injury rates. But at later ages conditions influence young adults to be employed in riskier occupations.

In chapter 3, I explore if conditions faced at different ages differentially affect the occupation characteristic outcomes analyzed in chapter 2. I find that early conditions faced at different ages in the early years into adulthood differentially affect estimates on the occupation characteristics. For example, early conditions faced at age 21 induce heavily affected cohorts to be employed in occupations that pay lower hourly wages. On the other, unemployment rates faced at the age of 18 provided no effect on being employed in a higher or lower paying occupation. A possible explanation for differences in estimates may be that experiencing recessions at age 18 may motivate young adults to orient themselves to acquire cognitive skills faster than their luckier counterparts, results of which I provided evidence for in chapter 1 on the likelihood of college attendance. On the other hand, it is possible that experiencing recessions at the time one graduates college may cause more harm than good as these young adults can no longer adjust on the choice of their college major. They will have to face the economic consequences for the major that they chose during their college going years.