The impact of labor market entry conditions on initial job assignment, human capital accumulation, and wages
AbstractWe estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian labor market between 1978 and 2000. We find a large negative effect of unfavorable entry conditions on starting wages as well as a sizeable negative long-run effect. Specifically, we estimate that a one percentage point increase in the initial local unemployment rate is associated with an approximate shortfall in lifetime earnings of 6.5%. We also show that bad entry conditions are associated with lower quality of a worker's first job and that initial wage shortfalls associated with bad entry conditions only partially evaporate upon involuntary job change. These and additional findings support the view that initial job assignment, in combination with accumulation of occupation or industry-specific human capital while on this first job, plays a key role in generating the observed wage persistencies.
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Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 520.
Date of creation: Dec 2010
Date of revision:
Initial labor market conditions; endogenous labor market entry; initial job assignment; specific human capital;
Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
- NEP-BEC-2010-12-18 (Business Economics)
- NEP-HRM-2010-12-18 (Human Capital & Human Resource Management)
- NEP-LAB-2010-12-18 (Labour Economics)
- NEP-MAC-2010-12-18 (Macroeconomics)
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.:
- Sylvia Frühwirth‐Schnatter & Christoph Pamminger & Andrea Weber & Rudolf Winter‐Ebmer, 2012.
"Labor market entry and earnings dynamics: Bayesian inference using mixtures‐of‐experts Markov chain clustering,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 27(7), pages 1116-1137, November.
- Sylvia Frühwirth-Schnatter & Christoph Pamminger & Andrea Weber & Rudolf Winter-Ebmer, 2010. "Labor Market Entry and Earnings Dynamics: Bayesian Inference Using Mixtures-of-Experts Markov Chain Clustering," NRN working papers 2010-14, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
- Sylvia Frühwirth-Schnatter & Andrea Weber & Rudolf Winter-Ebmer, 2010. "Labor Market Entry and Earnings Dynamics: Bayesian Inference Using Mixtures-of-Experts Markov Chain Clustering," Economics working papers 2010-11, Department of Economics, Johannes Kepler University Linz, Austria.
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