The impact of labor market entry conditions on initial job assignment, human capital accumulation, and wages

Beatrice Brunner and Andreas Kuhn

No 520, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: We estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian labor market between 1978 and 2000. We find a large negativ effect of unfavorable entry conditions on starting wages as well as a sizeable negative long-run effect. Specifically, we estimate that a one percentage point increase in the initial local unemployment rate is associated with an approximate shortfall in lifetime earnings of 6.5%. We also show that bad entry conditions are associated with lower quality of a worker's first job and that initial wage shortfalls associated with bad entry conditions only partially evaporate upon involuntary job change. These and additional findings support the view that initial job assignment, in combination with accumulation of occupation or industry-specific human capital while on this first job, plays a key role in generating the observed wage persistencies.

Keywords: Initial labor market conditions; endogenous labor market entry; initial job assignment; specific human capital (search for similar items in EconPapers)
JEL-codes: E3 J2 J3 J6 M5 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-bec, nep-hrm, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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