The Wage Scar from Youth Unemployment
Paul Gregg and
Emma Tominey ()
The Centre for Market and Public Organisation from Department of Economics, University of Bristol, UK
In this paper we utilise the National Child Development Survey to analyse the impact of unemployment during youth upon the wage of individuals up to twenty years later. We find a large and significant wage penalty, even after controlling for educational achievement, region of residence and a wealth of family and individual specific characteristics. We employ an instrumental variables technique to ensure that our results are not driven unobserved individual heterogeneity. Our estimates are robust to the test, indicating that the relationship estimated between youth unemployment and the wage in later life is a causal relationship. Our results suggest a scar from early unemployment in the magnitude of 12% to 15% at age 42. However, this penalty is lower, at 8% to 10%, if individuals avoid repeat incidence of unemployment.
Keywords: youth unemployment; scarring; cost of job loss (search for similar items in EconPapers)
JEL-codes: J31 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (14) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:bri:cmpowp:04/097
Access Statistics for this paper
More papers in The Centre for Market and Public Organisation from Department of Economics, University of Bristol, UK Contact information at EDIRC.
Series data maintained by ().