Education, skills and gender: The impact of a grading reform and the business cycle on labor market outcomes

Education, skills and gender: The impact of a grading reform and the business cycle on labor market outcomes

This thesis consists of three self-contained essays in economics, all concerned with different aspects of education and labor market outcomes. The abstracts of the three studies are as follows.

A flight of hurdles? Effects on graduation and long-term labor market outcomes of a nationwide grading reform.

In the academic year 1994/1995, a grading reform was implemented in Swedish upper secondary schools. The reform replaced norm-referenced grading with criteria-referenced grading that raised the hurdle to graduate on time. By exploiting exogenous variation in exposure to the reform due to exact date of birth coupled with implementation date, the effects on upper secondary school completion and subsequent long-term labor market outcomes are explored in a difference-in-discontinuity design. Results indicate that the probability to graduate from upper secondary school decreased throughout the ability distribution, with the strongest effects at the left tail. Furthermore, many of these individuals still lack a degree at age 33. Nevertheless, the grading reform does not seem to have had any clear effects on long-term labor market outcomes.

The effects of graduating from college in a recession: The case of Sweden

This paper studies the long-term labor market consequences of graduating college into the Swedish economic crises of the 1990s. I use a sample of Sweden born men who graduated college between the years 1985 and 1998. I estimate the effects of labor market conditions at the time of graduation on labor market outcomes using a panel covering 12 years post-graduation. Since the timing of graduation might be affected by economic conditions, I instrument the unemployment rate at graduation using the unemployment rate at age 25, which is the modal age of graduation. I find a significant negative effect on real annual earnings that last up to 5 years after graduation before fading out. The heterogeneity analysis reveals that graduates in the lower end of the distribution of cognitive abilities experience a substantial earnings loss that persists for at least eight years before fading out, while individuals with high cognitive ability are unaffected. Furthermore, I find that graduates well-endowed with noncognitive abilities, individuals we would expect to perform well on the labor market, also experience significant earnings losses.

Gender and field of study: The impact of graduating college into a recession.

The aim of this paper is to investigate if there are gender differences from entering the labor market during an economic downturn. Using a sample of Swedish college graduates who completed their first college degree between 1996 and 2007, I estimate short- and medium-term effects of graduating into adverse labor market conditions on a range of labor market outcomes such as annual earnings, nonemployment and skill-mismatch. I find that the overall differences between the genders of graduating college into a recession are driven by the choice of field of study and the fact that females outnumber male graduates with degrees aimed towards occupations in the public sector. The analysis shows only small differences between the genders when I compare outcomes within Business, Law and Engineering graduates, degrees leading to occupations that typically require workers to maintain a high degree of labor market attachment.