This dissertation contains three chapters related to the study of how business cycles create real and persistent effects on economic agents. Chapter 1 focuses on young individuals' careers and college decisions; Chapter 2 on firms' firing and hiring asymmetric decisions and Chapter 3 on firms' sourcing strategies. In Chapter 1 "Strategic or Scarred? Disparities in College Enrollment and Dropout Response to Macroeconomic Conditions" I show that educational choices amplify the scarring effects of recessions on young low-income individuals by experiencing an increased likelihood of dropping out of college and enduring negative labor market entry effects. High and middle-income young people strategically evade these effects, delaying labor market entry through timely college enrollment during economic downturns. I build a dynamic life-cycle model with educational choices calibrated to US data and I show that the negative consequences of recessions are largely concentrated on the poorest subset within the low-income group who endure a 40% reduction in lifetime consumption if a recession occurs while enrolled in college and on the second poorest subset who suffer a 24% lifetime consumption loss if it occurs around the time of high school graduation. In Chapter 2 "State Dependent Okun's Law: A Selective Labor Hoarding Approach" I show that Okun's Law is state dependent: the relationship is stronger during recessions. I hypothesize that this state dependency arises from firms engaging in selective labor hoarding. If firms hoard high-skilled workers outside of recessions to economize on training costs, the Okun relationship will be relatively flat in those times. Such labor hoarding becomes untenable during recessions, which produces a nonlinear response of unemployment. I build a dynamic model of directed search with training costs that generates the nonlinear response of unemployment to changes in real GDP. In Chapter 3 "Global Value Chains and Regional Shocks" we explore how regional shocks affect the formation of global supply chains, recognizing the trade-off firms face when choosing the sourcing location of their inputs. On the one hand, sourcing from similar countries entails a lower risk of being exposed to regional shocks. On the other hand, it implies firms are less able to take advantage of the pattern of comparative advantage across the world. Using customs data on Mexican firms we document how firms weigh this trade-off. We build a model of global sourcing that accounts for comparative advantage driven by geographical dispersion and different exposure to regional shocks driven by different levels of shock synchronization. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://bibliotheek.ehb.be:2222/en-US/products/dissertations/individuals.shtml.]