Throughout the recession of 2008–2009 and the slow recovery afterward, many young college graduates found themselves unemployed, many for a number of months. As painful as that experience was, economists had more bad news for them. The negative effect of early unemployment on your career lasts for many years!

Lisa Kahn, a labor economist, followed graduates of colleges from the period 1979–1989 over the subsequent 17 years. You know from Chapter 5 that within this overall period there was one recession in 1980–1982. Kahn finds that even 15 years later, wage rates of those with post-college unemployment lagged substantially. Not only did low wages persist, but fewer graduates in recessionary periods were able to enter high prestige jobs, even when the economy recovered.

Question

Describe a mechanism that might help explain the persistence of wage-effects from a recession.