Advanced Search
MyIDEAS: Login to save this paper or follow this series

The scars of youth : effects of early-career unemployment on future unemployment experience

Contents:

Author Info

  • Schmillen, Achim

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Umkehrer, Matthias

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

Abstract

"Does early-career unemployment cause future unemployment? We answer this question with German administrative matched employer-employee data that track more than 800,000 individuals over 24 years. Using a censored quantile instrumental variable estimator and instrumenting early-career unemployment with local labor market conditions at labor market entry and firm-specific labor demand shocks, we find significant and longlasting scarring effects. At the median, an additional day of unemployment during the first eight years on the labor market increases unemployment in the following 16 years by 0.96 days. Effects are even stronger in the right tail of the unemployment distribution. Likely due to unobserved heterogeneity in returns to search, they are also understated by non-IV estimates." (Author's abstract, IAB-Doku) ((en))

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://doku.iab.de/discussionpapers/2013/dp0613.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201306.

as in new window
Length: 54 pages
Date of creation: 23 May 2013
Date of revision:
Handle: RePEc:iab:iabdpa:201306

Contact details of provider:
Postal: Regensburger Str. 104, D-90327 Nürnberg
Phone: 0911/179-0
Fax: 0911/179-3258
Email:
Web page: http://www.iab.de/
More information through EDIRC

Related research

Keywords: Jugendarbeitslosigkeit - Auswirkungen; junge Erwachsene; Jugendliche; ältere Arbeitnehmer; mittleres Lebensalter; Arbeitslosigkeitsdauer - Determinanten;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," Boston College Working Papers in Economics 545, Boston College Department of Economics, revised 14 Feb 2003.
  2. David Neumark, 2002. "Youth Labor Markets In The United States: Shopping Around Vs. Staying Put," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 462-482, August.
  3. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-41, May.
  4. Wachter, Till von & Bender, Stefan, 2004. "In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers," IZA Discussion Papers 1348, Institute for the Study of Labor (IZA).
  5. Keith Finlay & Leandro M. Magnusson, 2009. "Implementing weak-instrument robust tests for a general class of instrumental-variables models," Stata Journal, StataCorp LP, vol. 9(3), pages 398-421, September.
  6. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
  7. Øivind Anti Nilsen & Katrine Holm Reiso, 2011. "Scarring Effects of Unemployment," CESifo Working Paper Series 3675, CESifo Group Munich.
  8. Edin, Per-Anders & Gustavsson, Magnus, 2005. "Time out of work and skill depreciation," Working Paper Series 2005:21, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. Gregg, Paul & Tominey, Emma, 2005. "The wage scar from male youth unemployment," Labour Economics, Elsevier, vol. 12(4), pages 487-509, August.
  10. Joshua Angrist & Victor Lavy & Analia Schlosser, 2010. "Multiple Experiments for the Causal Link between the Quantity and Quality of Children," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 773-824, October.
  11. Bowlus, Audra J, 1995. "Matching Workers and Jobs: Cyclical Fluctuations in Match Quality," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 335-50, April.
  12. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
  13. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
  14. Acemoglu, Daron, 1995. "Public Policy in a Model of Long-Term Unemployment," Economica, London School of Economics and Political Science, vol. 62(246), pages 161-78, May.
  15. Richard B. Freeman & David A. Wise, 1982. "The Youth Labor Market Problem: Its Nature, Causes, and Consequences," NBER Books, National Bureau of Economic Research, Inc, number free82-1, octubre-d.
  16. Thomas A. Mroz & Timothy H. Savage, 2006. "The Long-Term Effects of Youth Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
  17. Hamermesh, Daniel S, 1987. "The Costs of Worker Displacement," The Quarterly Journal of Economics, MIT Press, vol. 102(1), pages 51-75, February.
  18. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October.
  19. Amanda E. Kowalski, 2009. "Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care," NBER Working Papers 15085, National Bureau of Economic Research, Inc.
  20. Lockwood, Ben, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 733-53, July.
  21. Mary Corcoran & Martha S. Hill, 1985. "Reoccurrence of Unemployment among Adult Men," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 165-183.
  22. Burgess, Simon & Propper, Carol & Rees, Hedley & Shearer, Arran, 2003. "The class of 1981: the effects of early career unemployment on subsequent unemployment experiences," Labour Economics, Elsevier, vol. 10(3), pages 291-309, June.
  23. Fisman, Raymond & Svensson, Jakob, 2000. "Are corruption and taxation really harmful to growth? - firm-level evidence," Policy Research Working Paper Series 2485, The World Bank.
  24. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  25. David T. Ellwood, 1982. "Teenage Unemployment: Permanent Scars or Temporary Blemishes?," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 349-390 National Bureau of Economic Research, Inc.
  26. Blundell, Richard & Powell, James L., 2007. "Censored regression quantiles with endogenous regressors," Journal of Econometrics, Elsevier, vol. 141(1), pages 65-83, November.
  27. Marcelo J. Moreira, 2003. "A Conditional Likelihood Ratio Test for Structural Models," Econometrica, Econometric Society, vol. 71(4), pages 1027-1048, 07.
  28. Acemoglu, D. & Pischki, J.S., 1996. "Why Do Firms Train? Theory and Evidence," Working papers 96-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  29. Hansen, Lars Peter & Heaton, John & Yaron, Amir, 1996. "Finite-Sample Properties of Some Alternative GMM Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(3), pages 262-80, July.
  30. Bell, David N.F. & Blanchflower, David G., 2011. "Young People and the Great Recession," IZA Discussion Papers 5674, Institute for the Study of Labor (IZA).
  31. Victor Chernozhukov & Ivan Fernandez-Val & Amanda Kowalski, 2011. "Quantile Regression with Censoring and Endogeneity," Cowles Foundation Discussion Papers 1797, Cowles Foundation for Research in Economics, Yale University.
  32. Schmillen, Achim & Möller, Joachim, 2012. "Distribution and determinants of lifetime unemployment," Labour Economics, Elsevier, vol. 19(1), pages 33-47.
  33. James Heckman, 1993. "Assessing Clinton's Program on Job Training, Workfare, and Education in the Workplace," NBER Working Papers 4428, National Bureau of Economic Research, Inc.
  34. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
  35. Vishwanath, Tara, 1989. "Job Search, Stigma Effect, and Escape Rate from Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 487-502, October.
  36. repec:iab:iabfme:201006_en is not listed on IDEAS
  37. Arulampalam, Wiji, 2001. "Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages," Economic Journal, Royal Economic Society, vol. 111(475), pages F585-606, November.
  38. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 34-92, March.
  39. Beaudry, Paul & DiNardo, John, 1991. "The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 665-88, August.
  40. Emilia Del Bono & Andrea Weber, 2008. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," Journal of Labor Economics, University of Chicago Press, vol. 26, pages 181-221.
  41. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2012. "The Effects of Extended Unemployment Insurance Over the Business Cycle: Evidence from Regression Discontinuity Estimates Over 20 Years," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 701-752.
  42. Robert H. Topel & Michael P. Ward, 1988. "Job Mobility and the Careers of Young Men," NBER Working Papers 2649, National Bureau of Economic Research, Inc.
  43. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
  44. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  45. Chernozhukov, Victor & Hansen, Christian, 2006. "Instrumental quantile regression inference for structural and treatment effect models," Journal of Econometrics, Elsevier, vol. 132(2), pages 491-525, June.
  46. Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
  47. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective: Corrigendum," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 767-767, September.
  48. Hong H. & Chernozhukov V., 2002. "Three-Step Censored Quantile Regression and Extramarital Affairs," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 872-882, September.
  49. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
  50. Powell, James L., 1986. "Censored regression quantiles," Journal of Econometrics, Elsevier, vol. 32(1), pages 143-155, June.
  51. Gregg, Paul, 2001. "The Impact of Youth Unemployment on Adult Unemployment in the NCDS," Economic Journal, Royal Economic Society, vol. 111(475), pages F626-53, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Eichhorst, Werner & Hinte, Holger & Rinne, Ulf, 2013. "Jugendarbeitslosigkeit in Europa: Status Quo und (keine?) Perspektiven," IZA Standpunkte 57, Institute for the Study of Labor (IZA).
  2. Cahuc, Pierre & Carcillo, Stéphane & Rinne, Ulf & Zimmermann, Klaus F., 2013. "Youth Unemployment in Old Europe: The Polar Cases of France and Germany," IZA Discussion Papers 7490, Institute for the Study of Labor (IZA).
  3. Umkehrer, Matthias, 2013. "Youth Employment Instability, True State Dependence and Adult Wage Inequality," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80014, Verein für Socialpolitik / German Economic Association.
  4. Eichhorst, Werner & Hinte, Holger & Rinne, Ulf, 2013. "Youth Unemployment in Europe: What to Do about It?," IZA Policy Papers 65, Institute for the Study of Labor (IZA).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iab:iabdpa:201306. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IAB, Geschäftsbereich Dokumentation und Bibliothek).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.