An economic boom or bust during our childhood years can shape how we approach work and determine our professional motivations and job preferences as adults, according to new research from Columbia Business School.
Using data from the General Social Survey and the U.S. Bureau of Economic Analysis, the researchers examined variation in income-per-capita across US regions and over time since the 1920s, constructing a measure of macroeconomic conditions during one’s impressionable years. They found recessions create cohorts of workers who place higher priority on income for the rest of their careers, whereas economic booms produce cohorts who predominately care more about job meaning and fulfillment.
In the study report, Macroeconomic Conditions When Young Shape Job Preferences for Life, the researchers suggest that macroeconomic shocks—such as the IT boom, the Great Recession or the COVID-19 pandemic—have long-lasting effects on what people value in their professions. They found these temporary economic conditions create shared experiences among generations and may be the key to understanding persistent generational differences—versus some hard-to-explain, deeply ingrained personality factors.
The researchers say many of the generational groups currently recognized—Millennials, Generation X and Baby Boomers—may be too broad, spanning too large a period and overlooking substantial variation in shared macroeconomic conditions among group members. Following an alternative approach, where individuals form preferences based on shared macroeconomic experiences, they found that each generation has both “lucky” and “unlucky” individuals who will value different attributes in their jobs depending on the macroeconomic experiences during their impressionable years.
The study report indicates that overlooking these intra-generational differences in member preferences for work can have important consequences for organizations and the efficiency of labor markets.
In addition to the systematic effects of macroeconomic conditions on job preferences, the research suggest the value of work has effects on business cycle dynamics. For instance, as economic booms influence workers to care more about meaning and less about income, economic growth may slow as a result. Similarly, economies may rebound quicker from a recession as they produce cohorts of workers who place a priority on earning high incomes.The study report is available here.
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