As seniors prepare to graduate in only a few weeks, many have set their sights on the job market. A new Graduate School of Business (GSB) study concludes that job prospects and early salaries for business-school students depend on stock market conditions at the time of their graduation. The study, published by GSB Economics Prof. Paul Oyer, found these differences in salary also tend to persist over time.

The new research adds to a growing body of evidence that points to early career success — and a certain degree of luck — as indicators of future financial performance. The study analyzes the interplay between market conditions, initial job placement and long-term wage projections. To collect this data, Oyer tracked Stanford GSB graduates each year from 1960 to 1997.

Oyer noticed that students who left the University with a master’s in business administration in 1988 and 1989 fared far worse in initial job placement and made much less in lifetime earnings than students with comparable skills who graduated in later years. The reason for this wage differential, he concluded, was stock market conditions at the time of graduation. The crash in the fall of 1987 made it very difficult for graduates at that time to start their careers in the financial sector because investment firms were laying off workers.

With Wall Street was not hiring, graduates were forced to take jobs elsewhere for less, driving down the average graduating class salary. Even when conditions improved and jobs opened up, the 1988 and 1989 alumni did not fill them. Instead, newly-graduated MBAs were hired.

Oyer’s study also found that this wage gap did not close over time. Members of the classes of 1988 and 1989 who started out making less money, for example, still trailed their later-graduating peers nearly two decades later.

Oyer said he was surprised that these wage differences did not self-correct over time. Instead, the results showed that graduates’ first jobs and starting salaries had an inordinate impact on their later income stream.

“Given the transferability of MBA skills, it seems likely that any effect of stock returns on MBA placement would be short-lived,” he wrote in his paper.

“That is not to say they cannot catch up,” Oyer clarified in an email to The Daily. “But it’s tough. Graduating in a recession is a handicap. Much of the effects are in terms of what fields they work in and some is financial.”

GSB students expressed mixed reactions to the study’s findings.

Marquis Parker, a second-year student familiar with Oyer’s study, said he was initially surprised by the results. After thinking more carefully, Parker said the findings made sense.

“You come out of school and accept that first job,” he said. “And that job sets you up for the rest of your career.”

Parker said the data resonated with him personally.

“After college, I took a job as a software engineer,” he said. “I worked there for five years. It was a really great job. But the thing is you get stuck on this track. You develop certain skill sets in an industry, and the longer you stay there, the harder it makes it to switch fields. That’s why I decided to come to business school. I knew I wanted to do something different in the long run and I knew the sooner I switched, the better. I wanted to learn new skill sets while the market was still strong and break through that ceiling.”

He sympathized with his friends who graduated during the most recent economic recession.

“You hear stories about graduates who came out in 2001 and 2002 and it’s kind of depressing to spend those two years in business school only to find your prospects were limited by economic conditions,” he said. “It’s great to be graduating at this time.”

Other students said they thought the study’s findings were counterintuitive.

Stacy Duda, a second-year business school student, said she believed in upward mobility within businesses.

“It seems to me, if you are doing a good job, you should be able to work your way up,” she said.

But Kai Brown, a first-year business student, said she was not at all surprised by the study’s conclusion. She said she understood how much market conditions affect a graduate’s prospects and that she planned her time at business school to coincide with strong market conditions.

“I could have come to business school in 2002,” Brown said. “But my dad advised me to wait. It was an election year [in 2004] and my dad thought a change in the presidency could have a destabilizing effect on the economy. He said I should wait until after the election. I’m glad I took his advice.”

The Class of 2006 may be able to take solace in new estimates that the economy will grow by more than three percent this year.