kitchen table math, the sequel: from the FRBSF: Recent College Graduates and the Labor Market

Friday, November 11, 2011

from the FRBSF: Recent College Graduates and the Labor Market

Haven't read it yet, but here's the link.

I'm a big fan of the San Francisco Fed's Economics Letters.


gasstationwithoutpumps said...

I immediately questioned the assumption on which the whole argument is based: "Recent college graduates for the most part don’t experience skill and geographic constraints because they tend to be highly educated and mobile."

Anecdotally, engineering students have seen both high stated demand by employers and high unemployment—the employers are looking for very specific combinations of skills that few engineers have (recent college graduates or otherwise). Thus there is high "friction" even for recent college grads, undercutting all the assertions that the author builds on their flimsy base.

Unfortunately, I don't have solid data about the mismatch between the desires of employers and the skill sets of the labor force of engineers, so I can't rebut the paper formally. But I remain unconvinced that the authors know what they are talking about, or that it has any relationship to the world I live in.

Anonymous said...

I have some comments on this paper, too!

From the paper: "If structural constraints were at play, the wage growth of a labor-force subgroup with general skills and high mobility, such as recent college graduates, would outperform or be in line with wage growth in the overall labor market. That’s because recent college graduates are more mobile and adaptable, and are more able to make the adjustments needed to take hard-to-fill positions."

This is not true (or at least need not be true). Imagine that the structural problem was that business needed lots of people with a skill that took several years to develop. Say ... people who really were up to speed in a particular branch of mathematics (Lie algebras or somesuch).

Then the "wage growth of a labor-force subgroup with general skills and high mobility" could easily be non-existent. This part of the labor force just can't do the jobs, no matter how willing they are to relocate. The currently employed labor force (doing other things) might be fine (employers might be unwilling to fire the people they already have), while the new graduates can't find work because the available slots don't fit their skill set.

I'm *not* claiming that this is the case (and, in fact, I think the paper makes a decent case for this unemployment being non-structural), but the claim above is simply wrong.

Now ... item (2):

One big problem with jobs becoming more specialized (or requiring more specialized skills ... I think these are the same thing) is that it (a) takes longer for people who *could* do the job to acquire the necessary skills, and (b) it is more expensive for employers to offer the training. The military gets around (b) because you sign up for a term of service and can't just quit if someone offers you a higher salary. I don't know how employers could offer 6-12 months (or more) of training if the result at the end was that the company had just spent $20K of company money so that the employee could get a job with a competitor.

Do other countries deal with this differently? Maybe the industry as a whole funds the training?

-Mark Roulo