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Earnings Losses After Non-employment Increase With Age

  • Zwick, Thomas

This paper shows that earnings losses after unemployment increase with age. First, older employees start out with relatively high earnings in comparison to employees without employment interruptions several years before the non-employment spell. This earnings advantage turns into a strong earnings disadvantage shortly before the non-employment spell. Younger unemployed have a relatively stable and small earnings disadvantage before non-employment. Second, while the younger employees quickly enjoy earnings higher than those without employment interruptions after the non-employment spell, earnings for older employees are lower even six years after the unemployment spell. If those with non-employment spells re-enter the labour market at the same employer, the earnings impact is the more positive the younger the employee. This paper uses representative administrative spell data for 1993-2001 that allow us to take into account the precise length of all non-employment spells and calculate the exact dates before and after the spells.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-041.

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Date of creation: 2008
Date of revision:
Handle: RePEc:zbw:zewdip:7351
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  1. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles 92-11, W.E. Upjohn Institute for Employment Research.
  2. Carneiro, Anabela & Portugal, Pedro, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set," IZA Discussion Papers 2289, Institute for the Study of Labor (IZA).
  3. David Margolis, 2000. "Worker Displacement in France," Working Papers 2000-01, Centre de Recherche en Economie et Statistique.
  4. Schwerdt, Guido, 2011. "Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"," Labour Economics, Elsevier, vol. 18(1), pages 93-101, January.
  5. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  6. Burda, Michael C. & Mertens, Antje, 1999. "Estimating wage losses of displaced workers in Germany," SFB 373 Discussion Papers 1999,35, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  7. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  8. Zwick, Thomas, 2008. "The Employment Consequences of Seniority Wages," ZEW Discussion Papers 08-039, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Stefan Bender & Christian Dustmann & David Margolis & Costas Meghir, 1998. "Worker Displacement in France and Germany," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00370611, HAL.
  10. Richard Disney, 1996. "Can We Afford to Grow Older?," MIT Press Books, The MIT Press, edition 1, volume 1, number 026204157x, June.
  11. Chan, Sewin & Stevens, Ann Huff, 2001. "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 484-521, April.
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