Understanding the Scarring Effect of Recessions

Christopher Huckfeldt

American Economic Review, 2022, vol. 112, issue 4, 1273-1310

Abstract: This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment in lower-skill jobs. The model accounts for existing estimates of the size and cyclicality of the present value cost of job loss, and the cost of entering the labor market during a recession.

JEL-codes: E24 E32 J23 J24 J31 J63 J64 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20160449 (application/pdf)
https://doi.org/10.3886/E153821V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aer.20160449.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aer.20160449.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:112:y:2022:i:4:p:1273-1310

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aer.20160449

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().