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The scarring effect of unemployment in ten European countries : an analysis based on the ECHP

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  • Olivia Ekert-Jaffé
  • Isabelle Terraz

Abstract

This paper investigates the effect of unemployment on earnings for ten European countries. Using an harmonised database (ECHP), we estimate the impact of declared unemployment on individuals while taking account of attrition and unobserved individual heterogeneity. We find that the unemployment effect differs by country and gender. The wage penalty is greater for men than for women. It is also higher in the more flexible economies. We suggest that labour market institutions such as unemployment benefits and wage-setting institutions may be avenues of investigation to explain these differences.

Suggested Citation

  • Olivia Ekert-Jaffé & Isabelle Terraz, 2011. "The scarring effect of unemployment in ten European countries : an analysis based on the ECHP," Working Papers of BETA 2011-09, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  • Handle: RePEc:ulp:sbbeta:2011-09
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    File URL: http://www.beta-umr7522.fr/productions/publications/2011/2011-09.pdf
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    References listed on IDEAS

    as
    1. Olivia Ekert-Jaffe & Isabelle Terraz, 2005. "L'État et la cellule familiale sont-ils substituables dans la prise en charge des chômeurs en Europe ? [Une comparaison s'appuyant sur le panel européen]," Économie et Statistique, Programme National Persée, vol. 387(1), pages 65-83.
    2. Leonard, Jonathan & Van Audenrode, Marc, 1995. "The Duration of Unemployment and the Persistence of Wages," CEPR Discussion Papers 1227, C.E.P.R. Discussion Papers.
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    More about this item

    Keywords

    Unemployment; Unobserved heterogeneity; post unemployment earnings.;

    JEL classification:

    • 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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