By Betsy Cliff
For years, John Cawley, a professor of Public Policy and Economics at Cornell University, soon-to-be Daniel Patrick Moynihan Chair of Public Affairs at the Maxwell School at Syracuse University and nominee for ASHEcon President-Elect, has been the go-to resource for information about the job market for Ph.D. economists. His guide is read by scores of candidates each year and he’s given advice in numerous forums, including this newsletter. This year, many of the common employers for newly minted health economists have been impacted by changes in federal policy. I asked Dr. Cawley how that might impact the job market this year, and how people searching for jobs might navigate that. The transcription of our conversation has been edited for brevity and clarity.
Betsy Cliff (BC): I wanted to start by diving in with the federal situation. The Trump Administration has terminated research grants at universities and contracts for research and reduced the federal work force. How do you think that could impact the job market for health economists specifically?
John Cawley (JC): In many ways. Universities face significant uncertainty about indirect cost rates, whether existing grants will be canceled, whether current grant programs will continue to exist, or what the tax on their endowment might be. There’s also uncertainty around the flow of international students due to changes to our visa system and how the U.S. is perceived internationally. So it’s likely that universities will be risk averse about hiring. We’re hearing of soft hiring freezes of staff and faculty at certain universities.
In government, there’s been huge cuts, including to places like AHRQ (Agency for Healthcare Research and Quality) which historically hired health economists. Unfortunately, this is a situation in which both government and universities are likely reducing their demand for Ph.D. economists.
BC: Is this a shock specifically for health economists?
JC: No, it’s affecting economists of every field. The last two job market cycles were bad already. I think a lot of us expected that after Covid, there would be a rebound and the job market will go back to its previous strength. And it hasn’t really. The number of jobs listed in JOE (Job Openings for Economists) bounced back pretty well in 2021 and 2022 but then declined in 2023 and 2024. In Fall of 2024, the number of non-academic jobs posted on JOE was actually 20% lower than during the worst of the COVID years. So these new shocks are following upon two relatively down years.
BC: What about research firms?
JC: Historically, hiring in those firms wasn’t as cyclical as that in academia. But they’ve been letting people go because there isn’t as much contract work coming in from the government.
BC: Do you think that the federal turmoil is going to impact private sector jobs?
JC: Less than these other sectors. There was a shock in the tech sector a few years ago, and it seemed like they were hiring fewer economists than they were five, 10 years ago. It’ll be interesting to see what happens with that. I think consulting firms are still doing better than academia or government.
BC: What do you think candidates should know about the differences between private sector jobs and research jobs?
JC: There is some path dependence associated with your first job, and some transitions are easier to make than others. It is hard to go from something like litigation consulting to academia because you’re not publishing in peer-reviewed journals and you’re not teaching. So you’re not building the human capital that academic employers are looking for. People should be aware of this when deciding between sectors. The path from postdoc to assistant professor is straightforward, but you shouldn’t be thinking, ‘Oh, well, I’ll just go do consulting for five years and then I’ll go back to academia.’
BC: And one other thing that I don’t think people appreciate is that in those for-profit jobs you’re often not given the freedom to publish, right?
JC: Generally not, because it doesn’t benefit the firm. The way I heard it described to me was, ‘when we first hire you, we’ll give you some percentage of your time to wrap up your dissertation and maybe submit it for publication. But if in year two and three you’re still wanting time on your own to write papers, then maybe this isn’t a good fit.’
BC: Do the federal actions change the composition of who is looking for jobs?
JC: The job market for PhD economists is very heterogeneous. You have rookies — people just finishing grad school — and then you also have people who are more advanced and looking to make a lateral move. Right now, there may be more advanced job candidates than usual because so many people with substantial experience in government have lost their jobs. However, I’m not sure that those experienced folks are competing for the same jobs as rookies.
Arguably, I think we care more about the rookies than any other job candidates because they’re more vulnerable – they don’t have a current job they can stay in and research has found that graduating with your PhD during a down job market has lasting effects. Even if things improve two or three years later, you still may not get back on the same career trajectory you may have had in the counterfactual.
BC: That’s sounds really challenging. Do you have any advice for people coming out?
JC: One important thing to remember is that even when the macro situation is rough, individual results vary. We saw that even during the worst of Covid. When labor demand fell, a substantial number of people still got amazing jobs. So candidates should persist and try to stay positive.
A lot of the perennial advice holds which is: figure out who you are and clearly communicate that information to others. Think hard about your comparative advantages and how much you enjoy teaching, research, administration, grant writing, and service. Be honest with your advisors about all of that, as well as whether you have geographic constraints or strong preferences about sectors. Focus your attention on those employers, then, try to convincingly explain to them why you’re a good match for their position.
It’s perfectly fine and expected that different types of jobs will be a good match for different reasons. It’s also fine to keep your options open and learn along the way. But you shouldn’t claim it’s a good match when you know it really isn’t.
BC: What are some questions that people who are on the job market might want to ask potential employers right now?
JC: The difference between soft and hard money has likely become even more important. Hard money means you are guaranteed your salary even if you never bring any external funding. Your employer still might have some informal expectations but you’re not going to actually take home less if you don’t bring in external funding. With soft money, expectations around external funding are much more explicit and binding, and play a bigger role in tenure and promotion. In this environment, in which NIH and NSF may be dramatically cutting back their funding for research, candidates should have a candid discussion with soft money employers about what is the plan for supporting early career researchers.
BC: That’s a great point. Anything else people should know?
JC: There is tremendous substitutability between Econ PhDs and econ-adjacent PhDs. Econ-adjacent Ph.D.s include those in Public Policy, Health Policy, Applied Economics, and related fields. In many cases health economists with econ-adjacent Ph.D.s have taken the same types of classes in Micro and Econometrics, and may be doing extremely similar research to people with an Econ Ph.D. As a result, employers may see them as quite substitutable. So I would encourage people to apply broadly.
BC: If you don’t get offered a position at someplace that is your first choice, what do think is important to consider to be able to do good research?
JC: There are real differences in the resources that people are given to do research in different places. It’s not the prestige of the university that matters. What matters are factors like the teaching load, availability of seed grants, existence of a seminar series that brings in good external scholars, whether you have colleagues who give you useful feedback, and whether faculty have funding to attend conferences. Those are the inputs into the production of research.
BC: And if you don’t have those things?
JC: You can still find a way to stay active. You can attend online seminars, the online portions of major conferences and the online meetings of the NBER to stay informed about cutting-edge research. Co-author with people at other institutions if you don’t have natural co-authors in your department. Find a way to work with people that you can learn from and who make your work better.
The economics job market is incredibly fluid. It happens all the time that people who are at places with very high teaching loads find a way to be research productive, go back on the market, and then move somewhere that has a lower teaching load and more support for research.
BC: At a larger level, do you think there will be demand for the skills health economists have regardless of the political environment?
JC: Absolutely. Health economists tend to be skilled at applying theory, analyzing data, and communicating clearly in writing and verbally, all of which are valuable in a wide range of sectors. Also, objective researchers play a vital role in society. They don’t have an axe to grind, they’re not advocating for something and then seeking evidence to support it. They’re neutral experts who let the data speak for themselves and the chips fall where they may. There’s just not many people playing that role in society.
BC: And, at some point, policymakers will likely want to know what the consequences of a particular decision will be. We are in a good place to tell them.
JC: 100%. And I hope people have the bravery to continue studying important topics, even if there’s political hostility to them, even if the keywords on your title page are the ones that are being excluded from grant funding. If you think it’s important, please stick with it. It’s now more important than ever that people persist in studying these topics.