To shape the future: How labor market entry conditions affect individuals' long-run wage profiles

Beatrice Brunner and Andreas Kuhn

No 457, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: We study the long-run effects of initial labor market conditions on wages for a large sample of male individuals entering the Austrian labor market between 1978 and 2000. We find a robust negative effect of unfavorable entry conditions on starting wages. This initial effect turns out to be quite persistent and even though wages do catch up later on, large effects on lifetime earnings result. We also show that initial labor market conditions have smaller and less persistent effects for blue-collar workers than for white-collar workers. We further show that some of the long-run adjustment takes place through changes in job-mobility and employment patterns as well as in job tenure. Finally, we find that adjustments at the aggregate level are key to explain wages' adjustment process in the longer run.

Keywords: Labor market cohorts; initial labor market conditions; long-run wage profiles; persistence of labor market shocks; unemployment; business cycle (search for similar items in EconPapers)
JEL-codes: E3 J2 J3 J6 M5 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:457

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