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To Shape the Future: How Labor Market Entry Conditions Affect Individuals’s Long-Run Wage Profiles

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    Abstract

    We study the long-run effects of initial labor market conditions on wages for a large sample of male individuals entering the Austrian labor market between 1978 and 2000. We find a robust negative effect of unfavorable entry conditions on starting wages. This initial effect turns out to be quite persistent and even though wages do catch up later on, large effects on lifetime earnings result. We also show that initial labor market conditions have smaller and less persistent effects for blue-collar workers than for white-collar workers. We further show that some of the long-run adjustment takes place through changes in job-mobility and employment patterns as well as in job tenure. Finally, we find that adjustments at the aggregate level are key to explain wages' adjustment process in the longer run.

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    Paper provided by The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria in its series NRN working papers with number 2009-29.

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    Length: 63 pages
    Date of creation: Nov 2009
    Date of revision:
    Handle: RePEc:jku:nrnwps:2009_29

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    Postal: NRN Labor Economics and the Welfare State, c/o Rudolf Winter-Ebmer, Altenbergerstr. 69, 4040 Linz
    Phone: +43-732-2468-8216
    Fax: +43-732-2468-8217
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    Web page: http://www.labornrn.at/
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    Keywords: labor market cohorts; initial labor market conditions; long-run wage profiles; persistence of labor market shocks; unemployment; business cycle;

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    Cited by:
    1. Fujii, Mayu & Shiraishi, Kousuke & Takayama, Noriyuki, 2013. "The Determinants and Effects of Early Job Separation in Japan," CIS Discussion paper series, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University 590, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    2. Maclean, Johanna Catherine, 2013. "The health effects of leaving school in a bad economy," Journal of Health Economics, Elsevier, Elsevier, vol. 32(5), pages 951-964.

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