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Off to a bad start: youth nonemployment and labor market outcomes later in life

Author

Listed:
  • Mattia Filomena

    (University of Bergamo)

  • Isabella Giorgetti

    (Marche Polytechnic University
    Ecorys Group
    GLO – Global Labor Organization)

  • Matteo Picchio

    (Marche Polytechnic University
    Ghent University
    GLO – Global Labor Organization
    IZA – Institute of Labor Economics)

Abstract

We estimate the effect of nonemployment experienced by Italian youth after secondary school exit on subsequent labor market outcomes. We focus on the impact on earnings and labor market participation both in the short term and in the long term. By estimating a factor-analytic model that controls for time-varying unobserved heterogeneity, we find that the negative effect of nonemployment on earnings is persistent, being sizeable and statistically significant up to 25 years after school completion. Penalties in terms of participation last instead shorter. Hence, early nonemployment operates by persistently locking the youth who get off to a bad start into low-wage jobs.

Suggested Citation

  • Mattia Filomena & Isabella Giorgetti & Matteo Picchio, 2025. "Off to a bad start: youth nonemployment and labor market outcomes later in life," Empirical Economics, Springer, vol. 69(1), pages 549-579, July.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:1:d:10.1007_s00181-025-02735-y
    DOI: 10.1007/s00181-025-02735-y
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    Keywords

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    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • 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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