Mixed Signals: to what extent does male wage scarring vary with the characteristics of the local labour market in which unemployment was experienced?
I test the hypothesis that unemployment experienced in high unemployment regions is less likely to be viewed by employers as a negative productivity signal, and more as a characteristic of the region. This predicts that unemployment's short-run negative wage effects will be mitigated if experienced in high unemployment regions. If so, then what long-term implications does this have for future wage growth (Wage Scarring)? How important is regional heterogeneity in driving wage outcomes? Continuous work-life histories are matched to the regional context in which individuals reside. This novel data set permits control for the timing of career disruptions, as well as regional location at the time of displacement, whilst searching and at re-employment. Persistent wage penalties are found, conditional on previous labour market status. Seminal UK research concludes that the first spell of non-employment carries the highest penalty. Considering unemployment and inactivity, no reduction in the penalty associated with incidence of inactivity is found. Strong regional differences are found in the impact of redundancy on wage growth. This is contingent on labour market tight-ness and urbanity of the region in which unemployment was experienced. Redundancy followed by unemployment in areas of high economic activity is equally damaging for future earnings potential, independent of age. Moreover, robust evidence is found supporting the main hypothesis in the UK, on average and for over 45s made redundant in their previous jobs.
|Date of creation:|
|Contact details of provider:|| Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD|
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/
More information through EDIRC
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.:
- Lippman, Steven A. & McCall, John J., 1976. "Job search in a dynamic economy," Journal of Economic Theory, Elsevier, vol. 12(3), pages 365-390, June.
- Stewart, Mark, 2006.
"The Inter-related Dynamics of Unemployment and Low-Wage Employment,"
The Warwick Economics Research Paper Series (TWERPS)
741, University of Warwick, Department of Economics.
- Mark B. Stewart, 2007. "The interrelated dynamics of unemployment and low-wage employment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 511-531.
- Philip Ball & Ralf Wilke, "undated". "Job seeker's allowance in Great Britain: How does the regional labour market affect the duration until job finding?," Discussion Papers 09/03, University of Nottingham, School of Economics.
- Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1992.
"Earnings losses of displaced workers,"
Working Paper Series, Macroeconomic Issues
92-28, Federal Reserve Bank of Chicago.
- Coulson, N. Edward & Fisher, Lynn M., 2009. "Housing tenure and labor market impacts: The search goes on," Journal of Urban Economics, Elsevier, vol. 65(3), pages 252-264, May.
- 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.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
- 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, issue Nov, pages 2-20.
- 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.
- Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
- Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-188, January.
- Houle, Mario & Van Audenrode, Marc, 1995. "Job displacement, wages, and unemployment duration in Canada," Labour Economics, Elsevier, vol. 2(1), pages 77-91, March.
- Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
- Philip Ball, "undated". "Construction of a linked postcode district to regional-level dataset for Great Britain," Discussion Papers 09/09, University of Nottingham, School of Economics.
- repec:cup:cbooks:9780521848053 is not listed on IDEAS
- Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "The Income Losses of Displaced Workers," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
- Kunze, Astrid, 2002. "The Timing of Careers and Human Capital Depreciation," IZA Discussion Papers 509, Institute for the Study of Labor (IZA).
- Lori G. Kletzer & Robert W. Fairlie, 2003. "The Long-Term Costs of Job Displacement for Young Adult Workers," ILR Review, Cornell University, ILR School, vol. 56(4), pages 682-698, July.
- Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-589, March.
- Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-324, March.
When requesting a correction, please mention this item's handle: RePEc:not:notecp:11/13. 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: ()
If references are entirely missing, you can add them using this form.