IDEAS home Printed from https://ideas.repec.org/a/spr/italej/v9y2023i2d10.1007_s40797-022-00191-6.html
   My bibliography  Save this article

Scars of Youth Non-employment and Labour Market Conditions

Author

Listed:
  • Giulia Martina Tanzi

    (Bank of Italy, Milano Branch, Economic Research Unit)

Abstract

In this paper I analyse whether non-employment periods at the initial stage of the work career may increase the propensity to experience non-employment in subsequent years too, using data on young individuals in Italy. The role of labour market conditions in moderating these scarring effects is investigated, exploiting the regional differences across the country. The results provide evidence of negative effects induced by early non-employment. Moreover, the negative repercussions of early non-employment are smaller (higher) in regions with higher (lower) unemployment rates. This evidence can be interpreted using the signaling theory.

Suggested Citation

  • Giulia Martina Tanzi, 2023. "Scars of Youth Non-employment and Labour Market Conditions," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 475-499, July.
    • Handle: RePEc:spr:italej:v:9:y:2023:i:2:d:10.1007_s40797-022-00191-6
    DOI: 10.1007/s40797-022-00191-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40797-022-00191-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40797-022-00191-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    2. Kory Kroft & Fabian Lange & Matthew J. Notowidigdo, 2013. "Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 1123-1167.
    3. Bart Cockx & Matteo Picchio, 2012. "Are Short-lived Jobs Stepping Stones to Long-Lasting Jobs?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(5), pages 646-675, October.
    4. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 593-610.
    5. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    6. Gregg, Paul & Tominey, Emma, 2005. "The wage scar from male youth unemployment," Labour Economics, Elsevier, vol. 12(4), pages 487-509, August.
    7. Aksoy Cevat Giray, 2016. "The Effects of Unemployment on Fertility: Evidence from England," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 1123-1146, April.
    8. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
    9. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 17(Nov), pages 2-20.
    10. Cockx, Bart & Ghirelli, Corinna, 2016. "Scars of recessions in a rigid labor market," Labour Economics, Elsevier, vol. 41(C), pages 162-176.
    11. Sara Ayllón, 2013. "Unemployment persistence: not only stigma but discouragement too," Applied Economics Letters, Taylor & Francis Journals, vol. 20(1), pages 67-71, January.
    12. Joseph G. Altonji & Lisa B. Kahn & Jamin D. Speer, 2016. "Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 361-401.
    13. Stefan Eriksson & Dan-Olof Rooth, 2014. "Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment," American Economic Review, American Economic Association, vol. 104(3), pages 1014-1039, March.
    14. Russo, Giovanni & Gorter, Cees & Schettkat, Ronald, 2001. "Searching, hiring and labour market conditions," Labour Economics, Elsevier, vol. 8(5), pages 553-571, December.
    15. Gregory, Mary & Jukes, Robert, 2001. "Unemployment and Subsequent Earnings: Estimating Scarring among British Men 1984-94," Economic Journal, Royal Economic Society, vol. 111(475), pages 607-625, November.
    16. 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.
    17. Nordström Skans, Oskar, 2011. "Scarring Effects of the First Labor Market Experience," IZA Discussion Papers 5565, Institute of Labor Economics (IZA).
    18. Nilsen, Øivind A. & Reiso, Katrine Holm, 2011. "Scarring effects of unemployment," Discussion Paper Series in Economics 26/2011, Norwegian School of Economics, Department of Economics.
    19. Omori, Yoshiaki, 1997. "Stigma Effects of Nonemployment," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 394-416, April.
    20. Biewen, Martin & Steffes, Susanne, 2010. "Unemployment persistence: Is there evidence for stigma effects?," Economics Letters, Elsevier, vol. 106(3), pages 188-190, March.
    21. Daiji Kawaguchi & Tetsushi Murao, 2014. "Labor‐Market Institutions and Long‐Term Effects of Youth Unemployment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(S2), pages 95-116, October.
    22. 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.
    23. 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.
    24. Corinna Ghirelli, 2015. "Scars of early non-employment for low educated youth: evidence and policy lessons from Belgium," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-34, December.
    25. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    26. 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).
    27. 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.
    28. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    29. 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.
    30. Oddbjørn Raaum & Knut Røed, 2006. "Do Business Cycle Conditions at the Time of Labor Market Entry Affect Future Employment Prospects?," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 193-210, May.
    31. Effrosyni Adamopoulou & Giulia Martina Tanzi, 2017. "Academic Drop-Out and the Great Recession," Journal of Human Capital, University of Chicago Press, vol. 11(1), pages 35-71.
    32. Ben Lockwood, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(4), pages 733-753.
    33. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1371-1391.
    34. Gary-Bobo, Robert J. & Brodaty, Thomas & Prieto, Ana, 2008. "Does Speed Signal Ability? The Impact of Grade Repetitions on Employment and Wages," CEPR Discussion Papers 6832, C.E.P.R. Discussion Papers.
    35. Gregg, Paul, 2001. "The Impact of Youth Unemployment on Adult Unemployment in the NCDS," Economic Journal, Royal Economic Society, vol. 111(475), pages 626-653, November.
    36. Aina, Carmen & Pastore, Francesco, 2012. "Delayed Graduation and Overeducation: A Test of the Human Capital Model versus the Screening Hypothesis," IZA Discussion Papers 6413, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giulia Martina Tanzi, 2020. "Scars of youth non-employment and labour market conditions," Temi di discussione (Economic working papers) 1312, Bank of Italy, Economic Research and International Relations Area.
    2. Mattia Filomena, 2021. "Unemployment Scarring Effects: A Symposium On Empirical Literature," Working Papers 453, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    3. Gianni De Fraja & Sara Lemos & James Rockey, 2021. "The Wounds That Do Not Heal: The Lifetime Scar of Youth Unemployment," Economica, London School of Economics and Political Science, vol. 88(352), pages 896-941, October.
    4. Mattia Filomena & Isabella Giorgetti & Matteo Picchio, 2022. "Off To A Bad Start: Youth Nonemployment And Labor Market Outcomes Later In Life," Working Papers 466, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    5. Schmillen, Achim & Umkehrer, Matthias, 2013. "The scars of youth : effects of early-career unemployment on future unemployment experience," IAB-Discussion Paper 201306, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Corinna GHIRELLI, 2015. "Scars of early non-employment in a rigid labour market," LIDAM Discussion Papers IRES 2015008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Corinna Ghirelli, 2015. "Scars of early non-employment for low educated youth: evidence and policy lessons from Belgium," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-34, December.
    8. Anna Manzoni & Irma Mooi-Reci, 2020. "The cumulative disadvantage of unemployment: Longitudinal evidence across gender and age at first unemployment in Germany," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-20, June.
    9. Cockx, Bart & Ghirelli, Corinna, 2016. "Scars of recessions in a rigid labor market," Labour Economics, Elsevier, vol. 41(C), pages 162-176.
    10. Luis Beccaria & Roxana Maurizio & Martin Trombetta & Gustavo Vázquez, 2016. "Una evaluación del efecto scarring en Argentina," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 77, August.
    11. Lindgren, Petter Y. & Presterud, Ane Ofstad, 2021. "Expanding the Norwegian Armed Forces in the Time of Corona: Benefit-Cost Analysis in the Context of High Unemployment Rate," MPRA Paper 106405, University Library of Munich, Germany.
    12. John M. Nunley & Adam Pugh & Nicholas Romero & Richard Alan Seals, Jr., 2015. "Unemployment, Underemployment, and Employment Opportunities: Results from a Correspondence Audit," Auburn Economics Working Paper Series auwp2015-13, Department of Economics, Auburn University.
    13. Möller Joachim & Umkehrer Matthias, 2015. "Are there Long-Term Earnings Scars from Youth Unemployment in Germany?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(4-5), pages 474-498, August.
    14. Toman Barsbai & Andreas Steinmayr & Christoph Winter, 2022. "Immigrating into a Recession: Evidence from Family Migrants to the U.S," Working Papers 2022-01, Faculty of Economics and Statistics, Universität Innsbruck.
    15. Corinna.Ghirelli, 2014. "The scarring effect of early non-employment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/895, Ghent University, Faculty of Economics and Business Administration.
    16. Alexander Plum & Gail Pacheco & Kabir Dasgupta, 2021. "When There is No Way Up: Reconsidering Low‐paid Jobs as Stepping‐stones," The Economic Record, The Economic Society of Australia, vol. 97(318), pages 387-409, September.
    17. Matthias Umkehrer, 2019. "The impact of declining youth employment stability on future wages," Empirical Economics, Springer, vol. 56(2), pages 619-650, February.
    18. Bart Cockx & Matteo Picchio, 2013. "Scarring effects of remaining unemployed for long-term unemployed school-leavers," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(4), pages 951-980, October.
    19. Dorsett, Richard & Lucchino, Paolo, 2018. "Young people's labour market transitions: The role of early experiences," Labour Economics, Elsevier, vol. 54(C), pages 29-46.
    20. Székely,Miguel & Karver,Jonathan George, 2015. "Youth out of school and out of work in Latin America : a cohort approach," Policy Research Working Paper Series 7421, The World Bank.

    More about this item

    Keywords

    Scarring effects; Non-employment; Labour market conditions;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:italej:v:9:y:2023:i:2:d:10.1007_s40797-022-00191-6. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.