Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories

Parag Mahajan, Dhiren Patki and Heiko Stüber

No 16898, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Workers who enter the labor market during recessions experience lasting earnings losses, but the role of non-pay amenities in exacerbating or counteracting these losses remains unknown. Using population-scale data from Germany, we find that labor market entry during recessions generates a 5 percent reduction in earnings cumulated over the first decade of experience. Implementing a revealed-preference estimator of employer quality that aggregates information from the universe of worker moves across employers, we find that 17 percent of recession-induced earnings losses are compensated by non-pay amenities. Purely pecuniary estimates can therefore overstate the welfare costs of labor market entry during recessions.

Keywords: earnings inequality; recessions; non-pay amenities (search for similar items in EconPapers)
JEL-codes: E32 J24 J31 J32 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2024-04
New Economics Papers: this item is included in nep-eur, nep-hrm and nep-lma
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Related works:
Working Paper: Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories (2023)
Working Paper: Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories (2022)
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