The Long-Term Effects of Youth Unemployment
AbstractUsing NLSY data, we examine the long-term effects of youth unemployment on later labor market outcomes. Involuntary unemployment may yield suboptimal investments in human capital in the short run. A theoretical model of dynamic human capital investment predicts a rational “catch-up” response. Using semiparametric techniques to control for the endogeneity of prior behavior, our estimates provide strong evidence of this response. We also find evidence of persistence in unemployment. Combining our semiparametric estimates with a dynamic approximation to the lifecycle, we find that unemployment experienced as long ago as ten years continues to affect earnings adversely despite the catch-up response.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Journal of Human Resources.
Volume (Year): 41 (2006)
Issue (Month): 2 ()
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Web page: http://jhr.uwpress.org/
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- On the Outlook for the Economy and Policy
by Barry Ritholtz in the big picture on 2009-11-16 20:40:44
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