The Effects of Exposure to a Large-Scale Recession on Higher Education and Early Labor Market Outcomes

Abstract

This study examines the effects of timing of exposure to the Asian financial crisis on higher education and early labor market outcomes. We estimate a generalized difference-in-differences model exploiting variation in age at exposure and regional severity of the recession in South Korea. Using the Census and Youth Panel data, we find that individuals from hard-hit regions are less likely to attain a college education, tend to shift away from humanities to STEM majors, and have lower-quality first jobs, than their peers in the same cohort. These effects are more pronounced among individuals who experienced the recession at younger ages.