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Cohort size and youth earnings: Evidence from a quasi-experiment

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  • Morin, Louis-Philippe

Abstract

In this paper, I use data from the Canadian Labour Force Surveys (LFS), and the 2001 and 2006 Canadian Censuses to estimate the impact of an important labour supply shock on the earnings of young high-school graduates. The abolition of Ontario's Grade 13 generated a very large cohort of high-school graduates that simultaneously entered the Ontario labour market, generating a sudden increase in the labour supply. This provides a rare occasion to measure the impact of cohort size on earnings without the supply shock being possibly confounded with unobserved trends—a recurring problem in the literature. The Census findings suggest that the effect of the supply shock is statistically and economically important, depressing weekly earnings by 5 to 9%. The findings from the Census are supported by the LFS results that suggest that the immediate impact of the supply shock—measured about six months after high-school graduation—is also important.

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  • Morin, Louis-Philippe, 2015. "Cohort size and youth earnings: Evidence from a quasi-experiment," Labour Economics, Elsevier, vol. 32(C), pages 99-111.
    • Handle: RePEc:eee:labeco:v:32:y:2015:i:c:p:99-111
    DOI: 10.1016/j.labeco.2015.01.001
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    2. Huebener, Mathias & Marcus, Jan, 2017. "Compressing instruction time into fewer years of schooling and the impact on student performance," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 58, pages 1-14.
    3. Mario Reinhold & Stephan Thomsen, 2017. "The changing situation of labor market entrants in Germany [Die veränderliche Situation für Berufseinsteiger in Deutschland]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 50(1), pages 161-174, August.
    4. Dorner, Matthias & Görlitz, Katja, 2020. "Training, Wages and a Missing School Graduation Cohort," IZA Discussion Papers 13490, Institute of Labor Economics (IZA).
    5. Clémentine Garrouste & Mathilde Godard, 2016. "The lasting health impact of leaving school in a bad economy : Britons in the 1970s recession," Post-Print hal-01408637, HAL.
    6. Newhouse, David & Wolff, Claudia, 2014. "Cohort Size and Youth Employment Outcomes," IZA Discussion Papers 8197, Institute of Labor Economics (IZA).
    7. Alex Bryson & Rafael Gomez & Tingting Zhang, 2017. "All-Star or Benchwarmer? Relative Age, Cohort Size and Career Success in the NHL," Sports Economics, Management, and Policy, in: Bernd Frick (ed.), Breaking the Ice, pages 57-91, Springer.
    8. Chernina, Eugenia & Gimpelson, Vladimir, 2022. "Do Wages Grow with Experience? Deciphering the Russian Puzzle," IZA Discussion Papers 15068, Institute of Labor Economics (IZA).
    9. Stephan L. Thomsen, 2015. "The impacts of shortening secondary school duration," IZA World of Labor, Institute of Labor Economics (IZA), pages 166-166, July.
    10. Chernina, Eugenia & Gimpelson, Vladimir, 2023. "Do wages grow with experience? Deciphering the Russian puzzle," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 545-563.
    11. John Moffat & Duncan Roth, 2016. "The Cohort Size-Wage Relationship in Europe," LABOUR, CEIS, vol. 30(4), pages 415-432, December.
    12. Peters, Cornelius, 2015. "Do age complementarities affect labour productivity? Evidence from German firm level data," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112941, Verein für Socialpolitik / German Economic Association.
    13. David Neumark & Maysen Yen, 2020. "Relative Sizes of Age Cohorts and Labor Force Participation of Older Workers," Demography, Springer;Population Association of America (PAA), vol. 57(1), pages 1-31, February.
    14. repec:hal:wpaper:halshs-01521916 is not listed on IDEAS
    15. Clementine Garrouste & Mathilde Godard, 2016. "The Lasting Health Impact of Leaving School in a Bad Economy: Britons in the 1970s Recession," Health Economics, John Wiley & Sons, Ltd., vol. 25(S2), pages 70-92, November.
    16. Valentin Schiele, 2022. "Labor market spillover effects of a compulsory schooling reform in Germany," Working Papers Dissertations 84, Paderborn University, Faculty of Business Administration and Economics.
    17. repec:dau:papers:123456789/14542 is not listed on IDEAS
    18. Yan Lau, 2019. "The dragon cohort of Hong Kong: traditional beliefs, demographics, and education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 219-246, January.
    19. Daniela Ghio & Anne Goujon & Fabrizio Natale, 2022. "Assessing the demographic impact of migration on the working-age population across European territories," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 46(9), pages 261-272.
    20. David Card & A. Abigail Payne, 2021. "High School Choices And The Gender Gap In Stem," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 9-28, January.
    21. Sun, Shengmin & Chen, Jiawei & Chen, Jiaying, 2023. "Cohort crowding in education and employment: Evidence from China's compulsory education law," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 391-411.
    22. Godfred Bonnah Nkansah, 2022. "Youth Cohort Size, Structural Socioeconomic Conditions, and Youth Protest Behavior in Democratic Societies (1995–2014)," SAGE Open, , vol. 12(2), pages 21582440221, May.

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    More about this item

    Keywords

    Labour supply shock; Youth;

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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