The impact of labor market entry conditions on initial job assignment and wages

Beatrice Brunner and Andreas Kuhn ()

Journal of Population Economics, 2014, vol. 27, issue 3, 705-738

Abstract: We estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian labor market between 1978 and 2000. We find a large negative effect of unfavorable entry conditions on starting wages and a sizable negative long-run effect. Our preferred estimates imply a decrease in starting wages by about 0.9 % and a lifetime loss in wages of about 1.3 % for an increase in the initial local unemployment rate by one percentage point. We show that poor entry conditions are associated with lower quality of a worker’s first employer and that the quality of workers’ first employer explains as much as three-quarters of the observed long-run wage effects resulting from poor entry conditions. Moreover, wage effects are much more persistent for blue-collar workers because some of them appear to be permanently locked in into low-paying jobs/tasks. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Initial labor market conditions; Endogenous labor market entry; Initial job assignment; E32; J31; J62 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s00148-013-0494-4

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