For those about to graduate, the job market does not look promising. There have been several studies done on college graduates in the past years in an attempt to assess the importance of alternative career models and to predict the long-ranging effects of graduating in a recession. This article characterizes the decrease in gender wage gap between male and female college graduates from the early 90’s to 2012 in the USA.

Utilizing a large number of cohorts who experience several cycles of varying magnitudes we were able to study the effect on employment status, wages, and enrollment in graduate schools as a function of economic conditions and gender. Initially we observed a significant unemployment gap between male and female graduates in 1992. Interestingly, during the following years a stable reduction in the gender gap occurred. Moreover, using detailed year-by-year occupational and educational information from the IPUMS-CPS data and STAT analysis we obtained two stage graphs that revealed difference in wage cycle between males and females regardless of economic state. While female graduates wage cycle expresses significant plasticity and is highly sensitive to the business cycle, the male graduate wage cycle is steadier and less affected by the business cycle. Together, these results suggest that female graduates have a greater interest in returning to school after graduating in a recession while males prefer to remain part of the work force.

The Recession Of 2007

The National Bureau of Economic Research announced on December 1, 2008 that the U. S. economy had entered a recession in December of 2007. The unemployment rate increased from 4.9% in December 2007 to 9.6% in September 2009. Sadly, the job market appears more and more dismal as the years have passed since the recession was announced. Many students have decided to go straight to graduate school due to this dismal job market. Despite this steep competition among candidates, employers struggle to find professionals with in-demand skill sets. We are now facing times in which a college degree or an advanced degree, will not be a guarantee of employment security in the foreseeable future. A sluggish economy and an increasing proportion of college graduates in the population means that currently and in the near future, a larger number of graduates will have to seek and accept employment at a level below their aspirations and abilities.

In 2006 Philip Oreopoulos from the University of Torontoanalyzed the sources behind long-term earnings effects of graduating in a recession using a large longitudinal university-employer-employee data set. In his findings,male students graduating in a recession start to work at lower paying employers and higher skilled graduates suffer less from entry in a recession, while lower skilled graduates can be permanently affected by cyclical downgrading. Today’s college graduates, male and female, will enter the toughest labor market in the past 25 years and even those who do land jobs will likely suffer lower wages for a decade or more compared to those who graduate in better times. Moreover, the National Bureau of Economic Research (NBER) has tabulated the long-ranging effects of graduating in a recession, their findings show that graduating in a recession leads to earnings losses that average 9% versus those who graduate during flusher times . Over the next five years, that gap can be narrowed, but it doesn’t disappear for a full decade.

Having the misfortune to graduate in a recession can mark one’s entire career, as it can lead workers to start careers at smaller firms that pay less. Within the first 10 years of an individual’s career, he or she experiences 70% of his or her overall wage growth. So, if you start low, you won’t grow, on average, as much as those who had the good fortune to be born at a different time. The NBER believes that some of these factors can be mitigated. For starters, ambitious graduate students can and should change jobs frequently, moving from lower-quality employers to higher-quality. In addition, those who graduate with the highest predicted earnings, like doctors, lawyers and computer programmers, tend to suffer less due to a recession than those who graduate with lower predicted earning.

Economic Impact of the Great Recession 2007-2010 on Students

In March 2007, the national rate of unemployment in the United States was 9.7%, but for Americans younger than 25 it was 18.8%. In fact, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.
For college students, the economic impacts of the recession are wide ranging and often severe. If during better times, families and institutions encouraged higher education in many fields with modest debt loads; today according to the Bureau of Labor Statistics student choices are significantly more limited given the much higher loan loads.In addition to the immediate challenge of financing their education, college students face the narrowing of career optionsand the deterioration of future earnings.

Mainstream economists generally minimize anything beyond the short-term problem of initial joblessness, arguing that when the economy recovers, the skills that have been acquired by students during their educational years will be matched in the marketplace by appropriate offers. But labor economists have arrived at a more troubling analysis. Oreopoulos et al. 2008 shows that it takes 10 years for the student graduating during a typical recession to reach the level him or her otherwise would have reached graduating into a more normal period. The current extraordinary recession is likely to be even more damaging to the lifetime earnings of a graduate. A decade of one’s life facing inappropriate returns from one’s education is a serious burden that is further augmented by ever larger loan repayments.

Gender Gap

The global gender gap report of 2011 revealed that females working 41 to 44 hours per week earn 84.6% of what males working similar hours earn. Surprisingly, they also reported that the wage gap actually expands as the number of hours worked increases. Females working more than 60 hours per week earn only 78.3% of what males in the same time category earn. The American Center of Gender Studies found four occupational categories in which women earned a little more than men: special education teachers, order clerks, electrical and electronic engineers, and miscellaneous food preparation occupations. In addition, higher levels of education increase women’s earnings, just as they do for men.


By looking at the general unemployment rate of males and female graduates we could examine the behavior of Generation X (1965 – 1980) and Y (1980-1994) in the labor market during the latest decade recessions.To do so, we utilized data from the bureau of labor statistics during the years of 1992- 2011. In addition, we chose this time interval (recession of 1992, 2003 and 2007) because it allowed us compare between three recessions (time leading to recession, time of recession and after math).

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Figure 1 Unemployment rates of male and female graduates during the years of 1992-2011 in the USA.

According to Figure 1, during 1992 there was a significant unemployment gap between male and female graduates. This was caused because men were overrepresented in industries that experienced slowdowns during the early 90’s recession. Surprisingly, during the following eight years (1994-2001) a stablereductionin the gender gap occurred. In 2003, the beginning of the next recession, we can once again observe a gender gap that lasts about 4 years. After the recessions, while the economy is recovering from the initialed shock we see the general unemployment rates decrease. This affect minimizes the gender gap but does not completely or permanently close it. The second gender gap closed in 2005 and while the unemployment rate of both genders rose due to the recession of 2007, the gender gap is unnoticeable. In 2009 the third gender gap can be observed.

If we compare the unemployment rates adjacent to the beginning ofeach recession we see that males display higher rates of unemployment then females. This is in contrast to the pervious beliefs that females are one of the weak links in the labor force and are the first to leave the work force during and after a recession. Females are now becoming less unemployed during and after recessions.

Interestingly we also observed that the damage of the recession, measured through unemployment rate, has become higher with each recession in females and to greater extent in males. This may be caused by the inability of the economy to strongly stabilize itself because of the shorten time between recessions that becomes shorter with each new recession.

Real Wages and the Business Cycle

Using detailed year-by-year occupational and educational information from the IPUMS-CPS data and STAT analysis we observe a significant and fast leap of real wages for female graduates, as opposed to male gradates, both in and out of a recession. This comes in hand with Philip Oreopoulostheory; female wages are perhaps more sensible then male wages towards the business cycle because they are the weak link and therefore the first to be pushed out of the labor market or into unemployment. Our STAT analyses (Figure 2) strongly support his findings.


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Figure 2.ATwo scattered graph of years as a dependent variable of income in females that graduated during or after a recession.


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Figure 2 .B Two scattered graph of years as a dependent variable of income in males that graduated during or after a recession

Professional Trends During A Recession

According to the Labor department, U.S. job growth in August 2014 fell short of projections and slowed to its lowest level of the year with only 142,000 jobs added. Citing data from the Bureau of Labor Statistics, women have recouped 4.1 million private sector jobs since December 2007. While that’s less than half of the added 10 million jobs, men lost more jobs than women over the course of the recession, meaning women have less ground to make up. Men lost 6.1 million jobs between December 2007 and February 2010, and male workers have only recouped 5.9 million jobs. There is no question that the recession of 2007 hit males particularly harder, with jobs slashed from traditionally male-dominated sectors like manufacturing and construction.

Female graduates have a greater interest in returning to school after graduating in a recession because they have much lower wages due to a recession. The recession has also inspired many women to enroll in undergraduate degree-completion programs, with accounting and business being among the top choices for majors. One the other hand since males graduates are considered to be the dominate figure it is more casual for males to stay in the labor market and fight through the tough times then to return to school.Furthermore, Experience plays a crucial role as it will greatly differ between recession graduates. Those with more experience will be less effected by the down fall of the economy wither they be male or female graduates.