Education and Unemployment: State Dependence in Unemployment Among Young People in the 1990s

Kari Hämäläinen

No 312, Discussion Papers from VATT Institute for Economic Research

Abstract: This study examines the labour market careers of young people who finished their studies or left compulsory schooling in 1988. The main issue of interest is the impact of past unemployment on current unemployment. The results strongly suggest a sizeable scarring effect of the incidence of unemployment on future labour market possibilities. The impact is estimated of being some 20 percentage points, on average, in terms of unemployment probability. When differentiated by the level of education, the results show that only university graduates were relatively immune to the damaging long-term effects of unemployment.

Keywords: Youth labour markets, state dependence, unemployment, panel data, Labour market, Työmarkkinat, Labor market and policies promoting economic growth, Työmarkkinat ja kasvua tukeva politiikka, C100 - Econometric and Statistical Methods: General, J200 - Time Allocation; Work Behavior; Employment Determination and Creation; Human Capital, J400 - Particular Labor Markets: General, J640 - Unemployment: Models, Duration, Incidence, and Job Search, (search for similar items in EconPapers)
Date: 2003
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