World Bank Projects Wage Losses For College Graduates In The Class Of 2020: Time Of Recovery 8 To 10 Years

In its recent update on Human Capital in the Time of COVID-19, World Bank projects that those who graduate from college in the time of pandemic are likely to suffer short to medium-term wage losses.

According to World Bank, graduating during a recession is linked to significant initial earning loss due to less desirable job placements.

However, those who are just about to go to college could pay less the cost of education.

„Pandemic-induced high unemployment rates are likely to reduce the opportunity cost of attending college. At the same time, the recession will affect many households economically, and funds for attending college may not be available. After the latest financial crisis, enrollment rates for tertiary education in the United States went up. However, because of a substantial decrease in family incomes, students shifted away from four-year private colleges toward two-year public institutions. Those who graduate from college now are also likely to suffer short to medium-term wage losses. Evidence from Canada suggests that graduating during a recession  is  linked  to  significant  initial  earning  loss  due to  less  desirable  job  placements,  but  that  this  penalty  fades  over  some  8  to  10  years“, reports World Bank.

„Starting at a lower-paying job or at a less-desirable firm that does not  make  full  use  of  an  individual’s  existing  human  capital  may  well  lead  to  a  lag  in  skill  accumulation  and result in a persistent disadvantage“, projects World Bank.

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