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Earnings Losses after Non-Employment Increase with Age

Thomas Zwick ()

Schmalenbach Business Review (sbr), 2012, vol. 64, issue 1, 2-19

Abstract: This paper shows that after older workers experience periods of non-employment, earnings losses increase. Before non-employment, older employees have relatively higher earnings compared to younger employees without employment interruptions. This earnings advantage turns into a strong earnings disadvantage shortly before, and for a long time after, unemployment. Younger people who lose their jobs have a relatively stable, small earnings disadvantage before non-employment and quickly earn more than those without employment interruptions. The earnings effect of returning to the same employer after non-employment suggests that more involuntary work interruptions for older employees better explains the results than the loss of an implicit contract or specific human capital.

Keywords: Content Validity; Age; Earnings Losses; Non-Employment (search for similar items in EconPapers)
JEL-codes: C3 J31 J40 (search for similar items in EconPapers)
Date: 2012
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Working Paper: Earnings Losses After Non-employment Increase With Age (2008) Downloads
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Handle: RePEc:sbr:abstra:v:64:y:2012:i:1:p:2-19