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The Recession Hits Home

Ronald Reagan famously described the distinction between a recession and a depression as follows: “A recession is when your neighbor loses his job. A depression is when you lose yours.”

Right now, a few more economists might be willing to use the D-word.

The “help wanted” publication for Ph.D. economists is sporting a brand new section: suspended or canceled listings. It isn’t pretty. Over 30 job listings from the past few months have already been canceled, and plenty more universities never even listed an ad. And this doesn’t even count all of those who are in a “hiring frost” instead of a “hiring freeze,” or rumors of further cutbacks.

It is going to be a tough few months for newly-minted econ Ph.D.’s. And the long-run news is also grim: An intriguing study published a few years back by my former Stanford colleague Paul Oyer suggests that graduating in a downturn results in a lower-prestige initial job.

Worse, the consequences persist throughout your career, partly because research productivity is determined by the quality of your colleagues. My advice to those aspiring economists worried by all this is simply to keep your heads up. The best strategy for getting a job in a recession is exactly the same as in a boom — do good research, and be tenacious.

While some cost-cutting is inevitable given what has happened to university endowments, I think the extent of these cutbacks is probably myopic. It is rare to see so few employers competing over such an amazing pool of talent. Any dean worth his salt should expand hiring today, and cut back a bit during the booms when talent is scarce.

I wonder if other employers in the “real world” are also seeing the same incredible hiring opportunities that I currently see in the economics market.