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Education and Unemployment: State Dependence in Unemployment Among Young People in the 1990s

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  • Kari Hämäläinen
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    Abstract

    This study examines the labour market careers of young people who finished their studies or left compulsory schooling in 1988. The main issue of interest is the impact of past unemployment on current unemployment. The results strongly suggest a sizeable scarring effect of the incidence of unemployment on future labour market possibilities. The impact is estimated of being some 20 percentage points, on average, in terms of unemployment probability. When differentiated by the level of education, the results show that only university graduates were relatively immune to the damaging long-term effects of unemployment.

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    Bibliographic Info

    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 312.

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    Date of creation: 21 Aug 2003
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    Handle: RePEc:fer:dpaper:312

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    Related research

    Keywords: Youth labour markets; state dependence; unemployment; panel data;

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    1. James W. Albrecht & Per-Anders Edin & Marianne Sundström & Susan B. Vroman, 1999. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 294-311.
    2. Light, Audrey & Ureta, Manuelita, 1995. "Early-Career Work Experience and Gender Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 121-54, January.
    3. Sari Pekkala, 2002. "Unemployment and Migration: Does Moving Help?," Discussion Papers 281, Government Institute for Economic Research Finland (VATT).
    4. Blanchard, Olivier Jean & Diamond, Peter A, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 417-34, July.
    5. David Blanchflower & Richard Freeman, 1996. "Growing Into Work," CEP Discussion Papers dp0296, Centre for Economic Performance, LSE.
    6. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
    7. Michael Sattinger, 1993. "Statistical Discrimination with Employment Criteria," Discussion Papers 93-01, University at Albany, SUNY, Department of Economics.
    8. Wiji Arulampalam & Alison L. Booth, 2000. "Union status of young men in Britain: a decade of change," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 289-310.
    9. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October.
    10. Tomi Kyyrä, 1999. "Post-Unemployment Wages and Economic Incentives to Exit from Unemployment," Research Reports 56, Government Institute for Economic Research Finland (VATT).
    11. Waldfogel, Jane, 1998. "The Family Gap for Young Women in the United States and Britain: Can Maternity Leave Make a Difference?," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 505-45, July.
    12. Asplund, Rita, 2000. "Unemployment among Finnish Manufacturing Workers. Who Gets Unemployed and from Where?," Discussion Papers 711, The Research Institute of the Finnish Economy.
    13. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May.
    14. Christopher J. Ruhm, 1998. "The Economic Consequences Of Parental Leave Mandates: Lessons From Europe," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 285-317, February.
    15. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
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