Leaving school in an economic downturn and self-esteem across early and middle adulthood

In this study, we test whether leaving school in an economic downturn impacts self-esteem across early and middle adulthood. Self-esteem is of interest to economists because it is an established determinant of important socioeconomic outcomes such as wages, crime, marriage, health, and civic engagement. Previous research suggests that leaving school in a downturn can depress career trajectories, and social psychological theory predicts that career success is an important determinant of self-esteem. We model responses to a standard measure of self-esteem (the Rosenberg Self-esteem Scale) as a function of the state unemployment rate at school-leaving. We address the potential endogeneity of time and location of school-leaving with instrumental variables. Our results suggest that leaving school in an economic downturn can undermine self-esteem over time.