It’s bad luck to be born 20 years before a time of high unemployment. It affects your income when you enter the workforce, naturally, but that’s not all. It can keep your earnings relatively low — and chip away at your health and happiness, as well — for a lifetime.
Many studies have documented the income effect. A typical estimate, from a 2010 study, is that every percentage point increase in the unemployment rate during the year a person enters the workforce reduces his or her wages by 6 percent to 7 percent on average. And the reduction persists, though it diminishes somewhat over time. Even 15 years on, a person’s wages are 2.5 percent lower for every percentage point increase in the unemployment rate that happened when he or she graduated from college.
from Bloomberg View – Articles by Peter R. Orszag