Unemployment and subsequent earnings for Swedish college graduates. A study of scarring effects

The purpose of this paper is to study the long term effects of the college-to-work transition. The results reveal that unemployment immediately upon graduation has substantial and permanent effects on individual future earnings. Even for very short unemployment spells, estimated effects are statistically significant. These results are stable for the inclusion of a rich set of observable control variables, including grade point average from high school and parental educational level, and for choice of method i.e. OLS and propensity score matching.