The FINANCIAL — Universities across the world actually benefit during recessions, wielding far greater recruiting power to attract talented graduates compared to the private sector, shows new research from the London School of Economics and Political Science (LSE).
In tough financial times the stability of the academic world wins out over the boom-and-bust cycle of the private sector, according to the latest evidence.
Economist Dr Michael Boehm from LSE’s Centre for Economic Performance and Bonn University, said not only do universities wield more recruiting power in a recession, but the young graduates they attract are highly talented and more productive over many years.
“Their productivity is substantially higher than in boom times, a fact attributed to the stiff competition for jobs and a need to prove themselves,” Dr Boehm said.
Dr Boehm, a recent graduate himself, looked at data from the top 30 universities in the United States over a 40-year period, from 1955 to 1994.
He found that economists starting or graduating from their PhD in a recession were significantly more productive over the long term than economists starting or graduating in a boom.
While the study was confined to the US and to economics graduates, Dr Boehm said the results would “most likely” apply worldwide and to a range of other professions, with the public sector benefitting alongside universities.
“There is already a lot of evidence out there to show that if you start your career in a recession it can have an ongoing effect for many years. Many people who enter the private sector after graduating can expect to earn a lot less for at least a decade,” he said. “The academic sector is more stable during a recession – certainly in terms of job security – and there is no real noticeable drop in salaries, unlike the private sector,” he added.
The data shows that recession cohorts produce a lot more research, even 15 years after graduation.
Dr Boehm said the findings demonstrate that recessions change the composition of talent across sectors, influencing long-term productivity and output.
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