Could your first job influence your long-term earnings?

The first job you choose to go into could end up being very crucial for your future. Past research in economics has focused on the relationship between the economic conditions at play when workers first enter the labor market and their eventual long-term outcomes such as earnings. For example, graduating during recessions could lead to decreases in earnings often lasting a decade; while starting your first job at a larger firm versus a smaller job significantly improves lifetime earnings. But we do not know if the choice of initial (first) industry matters for long-term earnings.

Using data on American workers from the 1979 National Longitudinal Survey of Youth, this study finds a strong and positive relationship between making the choice to enter into an industry that experiences higher employment growth over time and the workers’ long-term earnings growth, 20 years from entry. Conversely, workers who selected an initial industry which faced lower employment growth over time experienced substantially lower earnings growth.

This association between initial industry and earnings is still valid even after accounting for all individual characteristics which could affect earnings, such as age, education, skills and ability, region of residence, etc., and information related to the family background. Interestingly, this association remained irrespective of whether the individual remained in their initial industry for at least five years or left earlier than that, and is much stronger for those occupations which involved more routine or manual tasks.