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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 6/2013

Classification and Topics

• Classification: Wirtschaft ; Unemployment: Models, Duration, Incidence, and Job Search ; Job, Occupational, and Intergenerational Mobility; Promotion ; Single Equation Models; Single Variables: General
• Subject: Scarring ; state dependence ; censored quantile instrumental variable regressions ; Scarring ; state dependence ; censored quantile instrumental variable regressions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmillen, Achim ; Umkehrer, Matthias
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/84934
• Last update: 10.03.2025, 11:44 AM CET