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We show that skill requirements in job vacancy postings differentially increased in MSAs that were hit hard by the Great Recession, relative to less hard-hit areas. These increases persist through at least the end of 2015 and are correlated with increases in capital investments, both at the MSA and firm levels. We also find that effects are most pronounced in routine-cognitive occupations, which exhibit relative wage growth as well. We argue that this evidence is consistent with the restructuring of production toward routine-biased technologies and the more-skilled workers that complement them, and that the Great Recession accelerated this process. (JEL E24, E32, J24, J31, J63, L23, O33)

Drawing on the Panel Study of Income Dynamics, we document a startling empirical pattern: the career earnings premium from a four-year college degree (relative to a high school diploma) for persons from low-income backgrounds is considerably less than it is for those from higher-income backgrounds. For individuals whose family income in high school was above 1.85 times the poverty level, we estimate that career earnings for bachelor’s graduates are 136 percent higher than earnings for those whose education stopped at high school. However, for individuals whose family income during high school was below 1.85 times the poverty level, the career earnings of bachelor’s graduates are only 71 percent higher than those of high school graduates. This lower premium amounts to $300,000 less in career earnings in present discounted value. We establish the prevalence and robustness of these differential returns to education across race and gender, finding that they are driven by whites and men and by differential access to the right tail of the earnings distribution.

Routine-biased technological change (RBTC), whereby routine-task jobs are replaced by machines and overseas labor, shifts demand towards high- and low-skill jobs, resulting in job polarization of the U.S. labor market. We test whether recessions accelerate this process. In doing so we establish a new fact about the demand for skill over the business cycle. Using a new database containing the near-universe of electronic job vacancies that span the Great Recession, we find evidence of upskilling — firms demanding more-skilled workers when local employment growth is slower. We find that upskilling is sizable in magnitude and largely due to changes in skill requirements within firm-occupation cells. We argue that upskilling is driven primarily by firm restructuring of production towards more-skilled workers. We show that 1) skill demand remains elevated after local economies recover from the Great Recession, driven primarily by the same firms that upskilled early in the recovery; 2) among publicly traded firms in our data, those that upskill more also increase capital stock by more over the same time period; and 3) upskilling is concentrated within routine-task occupations — those most vulnerable to RBTC. Our result is unlikely to be driven by firms opportunistically seeking to hire more-skilled workers in a slack labor market, and we rule out other cyclical explanations. We thus present the first direct evidence that the Great Recession precipitated new technological adoption.

Despite tremendous recent interest in the subject of student debt by both researchers and policy makers, little is known about how the distribution of college graduate debt has been evolving and what factors can explain it. We use National Postsecondary Student Aid Study data from 1990 through 2008 to document the evolution of college graduate debt profiles. We find that growth in debt over the 1990s was rapid and occurred throughout the distribution; during the 2000s, in contrast, debt grew appreciably only for the top quartile. Employing several decomposition techniques, we exploit the richness of the data to explain these shifts. Over the entire horizon, observable characteristics of students and institutions explain about one-third of the debt increase, though this share tends to be higher around the extensive margin and the median and lower in the right tail. While observables — largely costs — explain a majority of the increase between 1990 and 1996 and again from 2000 to 2008, they explain nothing over the late 1990s. We offer suggestive evidence that this “unobservable” share was supply-side driven, owing to the advent of both federal unsubsidized Stafford loans and private loans.

This paper explores how high school graduate men and women vary in their behavioral responses to beginning labor market entry during a recession. In contrast with previous related literature that found a substantial negative wage impact but minimal employment impact in samples of highly educated men, the empirical evidence presented here suggests a different outcome for the less well educated, and between the sexes. Women, but not men, who graduate high school in an adverse labor market are less likely to be in the workforce for the next four years, but longer-term effects are minimal. Further, while men increase their enrollment as a short-run response to weak labor demand, women do not; instead, they appear temporarily to substitute into home production. Women's wages are less affected than men's, and both groups' wages are less affected than the college graduates previously studied.