The Wage Scar from Youth Unemployment
AbstractIn this paper we utilise the National Child Development Survey to analyse the impact of unemployment during youth upon the wage of individuals up to twenty years later. We find a large and significant wage penalty, even after controlling for educational achievement, region of residence and a wealth of family and individual specific characteristics. We employ an instrumental variables technique to ensure that our results are not driven unobserved individual heterogeneity. Our estimates are robust to the test, indicating that the relationship estimated between youth unemployment and the wage in later life is a causal relationship. Our results suggest a scar from early unemployment in the magnitude of 12% to 15% at age 42. However, this penalty is lower, at 8% to 10%, if individuals avoid repeat incidence of unemployment.
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Bibliographic InfoPaper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 04/097.
Length: 49 pages
Date of creation: Feb 2004
Date of revision:
youth unemployment; scarring; cost of job loss;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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- An ageing workforce
by chris dillow in Stumbling and Mumbling on 2010-02-17 11:52:52
- State of economy for less-educated young people compounds growing Opportunity Gap
by socialcapital in Social Capital Blog on 2013-05-06 14:55:44
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by chris dillow in Stumbling and Mumbling on 2013-06-18 13:27:00
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