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The scars of youth : effects of early-career unemployment on future unemployment experience

Author

Listed:
  • Schmillen, Achim

    (IAB ; Institute for East and Southeast European Studies ; National Bureau of Economic Research)

  • Umkehrer, Matthias

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"Does early-career unemployment cause future unemployment? We answer this question with German administrative matched employer-employee data that track more than 800,000 individuals over 24 years. Using a censored quantile instrumental variable estimator and instrumenting early-career unemployment with local labor market conditions at labor market entry and firm-specific labor demand shocks, we find significant and longlasting scarring effects. At the median, an additional day of unemployment during the first eight years on the labor market increases unemployment in the following 16 years by 0.96 days. Effects are even stronger in the right tail of the unemployment distribution. Likely due to unobserved heterogeneity in returns to search, they are also understated by non-IV estimates." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • 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].
    • Handle: RePEc:iab:iabdpa:201306
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    Keywords

    Bundesrepublik Deutschland ; Auswirkungen ; Determinanten ; Jugendarbeitslosigkeit ; Jugendliche ; junge Erwachsene ; ältere Arbeitnehmer ; mittleres Lebensalter ; Arbeitslosigkeitsdauer;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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